Response to DECC consultation: Carbon units, the net UK carbon account and carbon accounting
The Environment Agency welcomes this opportunity to respond to the Government’s proposals for carbon accounting in the UK under the Climate Change Act.
As operator of the EU Emissions Trading Scheme and the designated operator for the Carbon Reduction Commitment, we have direct experience of carbon accounting and are well placed to respond.
In summary, we consider that:
With regard to carbon units brought from, or sold to, other countries, only EU ETS recognised allowances and Kyoto Certified Emissions Reductions (CERs) should contribute to meeting the UK carbon account.
Carbon units generated from outside the UK and used to meet the UK carbon budgets should be cancelled or retired, and not sold or transferred, to avoid double counting. We also consider that the use of free credits should be avoided to reflect the true carbon price in investment decisions.
To ensure that actual reductions are made as a result of a tighter UK target, any surplus carbon units resulting from the difference between the UK's tighter number of available units and the number of units provided by Kyoto must be cancelled.
If the net UK carbon account is below the level of the budget at the end of the budget period, the surplus units must be cancelled. We do not believe that there will be a need for a carry-over of surplus units for Kyoto purposes, given that the UK carbon budget will always be more stringent than our international obligations for Kyoto.
Our reporting practice must change with any revision in internationally accepted carbon reporting practice.
We agree that the administration and operation of the UK carbon accounting system should build on existing carbon accounting systems under the UK Registry.
However, clarity is needed on what additional sources of data will be used to calculate the full carbon account, given the EU Emissions Trading Scheme and Carbon Reduction Commitment only account for 60% of UK carbon emissions.
Read our full response