Muddied carbon accounting will slow industrial decarbonisation

THE UK’s Energy Systems Catapult has warned there are “inconsistencies” in carbon accounting that will make it difficult to achieve meaningful decarbonisation across industry and makes mechanisms vulnerable to “greenwashing”.

The Catapult says that industry was responsible for up to 16% of total emissions (72m t CO2e) in the UK in 2021. It says to achieve deep decarbonisation of industry and help the UK reach its net zero target, it is important to have a clear picture of industrial greenhouse gas (GHG) emissions to enable decision makers to track progress towards the UK’s goal.

In its report, the Catapult highlights several inconsistencies in the monitoring, reporting, and verification used to support emissions reduction in industry. Among these are: that operational levels can be discretely reported or aggregated (eg project level, corporate level, national level); coverage ranges from direct emissions (Scope 1) to emissions from energy use (Scope 2) and throughout the supply chain (Scope 3); temporal and spatial boundaries, especially for offsets, which do not match attributed emission timescales; and reductions, removals, atmospheric avoidance, and offsets, and the stage at which they are accounted for.

It says aggregating emissions data may protect sensitive operational data, as most accounting mechanisms do not require full transparency. However, this can lead to a lack of clarity in how the data was aggregated.

As well as impacting industrial decarbonisation, the centre said these variations increase the administrative burden that industry faces in reporting its emissions and exposes mechanisms to unintended consequences, such as double counting. It says the burden results from varying, and sometimes overlapping reporting mechanisms and managing these differences is becoming increasingly complex.

The Catapult notes that while some flexibility in accounting approaches will be essential to supporting decarbonisation and encouraging partnerships across sectors, a “delicate balance” has to be achieved between consistency and flexibility that requires clear, industry-wide guidance. It adds that imposing a blanket set of accounting standards and definitions would not be feasible due to legitimate variations in objectives and the operation of different decarbonisation mechanisms.

It recommends a whole systems approach should be adopted that uses industry expertise to support economy-wide decarbonisation, facilitate regional partnerships, promote international best practice, and encourage reshoring of industry while preventing further offshoring. It also says that monitoring, reporting, and verification should be used at the installation level. The Government, it says, should commit to funding the development of an integrated carbon accounting framework for subsets of industry subsectors and industrial clusters and establish an accounting regulator.