Carbon Reporting in the UK: Where Are We Now?

Carbon Reporting in the UK: Where Are We Now?

It’s been over 10 years since the British Government legislated the Companies Act. 8 years have passed since the Climate Change Act came into effect. Nevertheless, carbon reporting and greenhouse gas regulations are still a source of worry for energy managers. To prepare for our free training about how to automate carbon reporting, let’s check what carbon reporting and GHG regulation means for energy managers in the UK.

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Carbon Reporting Regulations in the UK

According to the Companies Act of 2006, all quoted companies are required to measure and report their yearly greenhouse gas (GHG) emissions in their directors’ report.

This legislation went into effect in October 2013, affects all companies incorporated in the UK and whose equity share capital is listed on the London Stock Exchange. Quoted companies also include those officially listed in a European Economic Area or those who deal on the NYSE or NASDAQ.

Essentially, this means almost 5,000 organisations were forced to report their carbon emissions.

This is not the only carbon reporting regulation that might affecting your company or your clients in the UK. The Climate Change Act of 2008 was passed to develop an economically viable way to reduce UK carbon emissions by at least 80% in 2050 from 1990 levels.

To meet this 2050 target, also known as the Carbon Plan, the Act requires the Government to formulate “carbon budgets” which are legally binding and cap the amount of GHGs that can be emitted in the UK over a 5-year period. The first 5 carbon budgets have been legislated and run up to 2032. 

Are Carbon Reporting Regulations in the UK Making a Difference?

The good news is that the final numbers of carbon emissions on national level were made public very recently, on 7th February 2017 (see the complete report here).

According to this data, and due in part to the aforementioned carbon regulations, the UK is on track to meet their Second Carbon Budget (as mentioned, they are now up to a Fifth Carbon Budget. More about that here).

This goal is on the cusp of achievement thanks to reductions in greenhouse gas emissions by 4% in 2015 (relative to 2014). Compared to 1990, the UK has seen a 38% reduction in greenhouse gas emissions and a 32% decrease in carbon emissions.

Still, some things never change despite any amount good news. Case in point: energy suppliers are still the biggest source of greenhouse gas emissions in the UK.

In our honest opinion, yes, having carbon budgets and a clear focus on reducing emissions is generally working for the UK. But will that change when Britain leaves the European Union?

What Will Happen To Carbon Reporting in the UK After Brexit?

One of the hottest questions on everyone’s mind right now is what a post-Brexit energy landscape looks like. This is especially true following recent reports of the UK Government asking about the consequences of failing to meet certain emissions reporting targets (in the merchant shipping industry for example).

In October, the Committee on Climate Change released a briefing note about the implications of Brexit on carbon reporting in the UK. The main takeaways are:

  • UK carbon regulations are based on the Climate Act, which is a domestic regulation. They are not based on European Union laws.
  • The UK Carbon Budgets will not be affected by Brexit. Following the carbon budgets is appropriate for the country whether or not it is a member of EU.
  • If the UK economy is affected by Brexit, some commentators claim that since less energy will be consumed, fewer carbon emissions will be generated. Therefore, carbon budgets are unnecessary. But the CCC advises – wisely, in our opinion – that uncertainty is not a new factor in the Brexit equation: it’s always been there, and has been taken in account in the carbon budget calculations.
  • One thing that will probably change is the accounting of carbon budgets, which is partially based on budgets covered by the EU ETS. But the CCC admits that another possible scenario is the UK remaining in the EU ETS even after leaving the EU.

Overall, the CCC estimates that EU-level policies agreed to by the UK have contributed approximately 40% of the reduction in UK emissions since 1990.

When it comes to energy policy, the main challenges for the UK in terms of EU relations could be:

  • Non-participation the single energy market. In 2015, 7% of UK electricity was supplied via interconnectors that allow energy to be traded across national borders, ensure security of supply and lower prices.
  • Losing the binding “member state” renewables targets. Will the UK continue pushing renewables with no targets or interest from the EU?
  • The UK will need to develop further regulation on its own to fill the “policy gaps” created by the Brexit vacuum.
  • Special focus on industry to keep boosting performance and energy efficiency as a key component of the UK economy.
  • For transportation, the CCC recommends continued use of EU vehicle efficiency standards or to replicate these at the UK level.

Are you ready to take control of your carbon reporting at your company? Learn how the latest am&T software can make carbon compliance come easier with our free video training:

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