In March the Government published a series of reports, policies and consultations as part of Green Day (or Energy Security Day). In total, Carbon Brief reports that 44 different documents were published including 2,840 pages.
Behind-the-scenes industries are reviewing the series of documents to understand the impacts of the Government’s proposals, including the Climate Change Committee which received a response on the 2022 Annual Progress Report Recommendations.
While we anticipate their responses, we thought we would share 7 of our key takeaways with you.
1. Net Zero is the way forward
The leading message from Government is that the net zero transition provides the opportunity for economical growth, creating new sectors, technologies and jobs. Although not a new announcement, this is actually really important for wider understanding and engagement outside of industry and related sectors, on how net zero should be viewed as a leading part of the UK’s ongoing growth strategy.
2. Validating GHG Scope 3 reporting
Recognising that Scope 3 GHG emissions can account for anywhere between 80-95% of an organisation’s total footprint, the Government has committed to a review of Scope 3 Greenhouse Gas emissions reporting, to better understand the costs and benefits of producing this data which is currently seen as an ‘information gap’. They will also update the Environmental Reporting Guidelines, including for Streamlined Energy and Carbon Reporting (SECR).
3. Carbon import tax
As part of measures to address carbon leakage, there will be a consultation into whether there should be a Carbon Border Adjustment Mechanism (CBAM), effectively an import tax, on products in sectors subject to the UK ETS. This would in large effect imports across the power generation, cement, glass, iron and steel, and refining sectors, among others. Potentially this could launch as soon as 2026. The consultation closes on 22 June 2023.
4. Energy Performance Certificates (EPCs)
Unfortunately there is not much to say on Energy Performance Certificates (EPCs), despite calls for the regulation to go further in encouraging the uptake of energy efficiency measures in the commercial space. However, Government has confirmed that it is working on proposals through the EPC Action plan, which includes an overhaul of the building physics model to make it fit for purpose to support net zero. They will consult on these reforms this year.
5. Embodied emissions reporting
The Government has finally committed to looking at how to extend GHG reporting to include embodied emissions. Depending on the extent of the policy, this could include emissions related to the extraction and processing of raw materials and fuels, combustion of fuels, process emissions and end-of-life emissions. The purpose of this framework would be to ensure that all in-scope products that enter free circulation in the UK market that are within scope of relevant carbon leakage measures, have an embodied emissions value associated with them.
6. Growing the voluntary carbon market
To position the UK as a global hub for voluntary carbon trading, the Government will work to improve the integrity of voluntary carbon markets (VCMs), to support their growth and protect against greenwashing. They will also look to develop nature market standards for investment in carbon and other ecosystem services. However, this should not come at the expense of direct action by businesses who should still focus on reducing their GHG emissions and align their net zero strategies with a science-based pathway.
7. New net zero regulators forum
A new forum will be established to coordinate regulators; including Ofgem, the Environment Agency, and the Competition and Markets Authority, on the signals they are sending to businesses and investors about the net zero transition. The forum will include dedicated sponsorship teams which lead on government-regulator engagement. The scope, remit, and ambition of this forum is expected to be confirmed by Summer 2023.