Consultation outcome

Factsheet: voluntary standards and embodied emissions reporting

Updated 18 December 2023

1. What has the government announced?

In its response, the government announced that it will:

1. Work with industry to establish voluntary product standards that businesses could choose to adopt to help promote their low carbon products to consumers.
2. Develop an embodied emissions reporting framework that could serve future carbon leakage and decarbonisation policies.
3. Carry out a further technical consultation in 2024 on voluntary product standards and embodied emissions reporting and continue to work closely with UK industry to develop these measures further.

2. How will voluntary product standards work? 

• Voluntary product standards can help buyers understand the carbon emissions that have been produced in the manufacture of their products, and to compare their options. This could help low carbon products stand out to consumers who want to make lower carbon choices, and so help grow the market for them. A larger market for low carbon products would be more resilient against the risk of carbon leakage risk and greenwashing.
• Voluntary product standards will be optional and not impose a regulatory burden on businesses. Their design would complement other policies or regulations that apply to specific sectors or products.
• The government will carry out a technical consultation in 2024 on voluntary product standards and embodied emissions reporting and continue to work closely with UK industry to develop these measures further.

3. How will emissions reporting work?

• An embodied emissions reporting framework will be essential to developing carbon leakage mitigations and policies to grow the market for low carbon products, such as voluntary product standards.
• A standardised methodology for the monitoring and reporting of the embodied emissions of products will allow government to collect and publicise robust, consistent data – supporting consumer choice, more effective procurement decisions and improved targeting of government policy.
• The government would develop a reporting system based on the following principles:
  • maximising the use of existing data
  • achieving the necessary accuracy to underpin policy
  • aligning with evolving international consensus, and
  • minimising administrative burdens on industry.
• The government will carry out a technical consultation in 2024 on voluntary product standards and embodied emissions reporting and continue to work closely with UK industry to develop these measures further.

4. Why do we use the term ‘product standards’ rather than benchmarks/thresholds?

• The government will work with industry to establish a system of voluntary product standards. These will be used to establish benchmarks relating to the embodied emissions of selected industrial products.
• The government recognises that the word ‘standard’ is already used in other contexts, for example standards for measuring and verifying embodied emissions, such as those published by ISO or other national standards bodies. The government may change its terminology to minimise confusion as policies develop, but for reference the government has used terms as below for this consultation and response:
  • Voluntary Product Standards (VPS) describes a system for benchmarking products based on their embodied emissions. They would be used to help define, and differentiate between, lower and higher carbon versions of products. The standards would be ‘voluntary’ in the sense that a manufacturer would not be required to meet any one of these standards in order to manufacture or sell a product in the UK.
  • Mandatory Product Standards (MPS), if introduced, would be a form of regulation to set a maximum limit on the embodied emissions for a product. This could use the VPS system, for example in an A to G range, ‘G-rated’ products could be prohibited
  • Product Labels would provide information about a product’s embodied emissions. Product labels could be used to communicate which voluntary standard a product meets and can be used to display a product’s embodied emissions data. The goal of product labelling is to empower consumers and businesses to make informed purchasing decisions

5. How do these announcements relate to the UK Emissions Trading Scheme?

• The UK government is committed to mitigating carbon leakage risks at all stages of the net zero transition. New carbon leakage policies including voluntary standards and embodied emissions reporting will be designed to work cohesively with our existing carbon leakage policy measures, including allocation of UK Emissions Trading Scheme (ETS) free allowances by the UK ETS Authority.
• The UK ETS came into force on 1 January 2021. The scheme is a key part of the UK’s approach to addressing climate change, setting a limit on emissions from the sectors covered and ensuring an appropriate price is applied to them. The scheme is jointly run by the UK ETS Authority, comprising the UK government, Scottish Government, Welsh Government and the Department of Agriculture, Environment and Rural Affairs for Northern Ireland.
• To mitigate the carbon leakage risk for sectors covered by the UK ETS, a proportion of UK ETS allowances are assigned to operators in exposed sectors for free. Free allocation policy is the responsibility of the UK ETS Authority.
• Last year, the UK ETS Authority consulted on a wide range of changes to the UK ETS with the aim of ensuring that it can play a key role in reaching net zero targets, while supporting businesses in the transition. The response to the consultation was published in July 2023.
• The UK ETS Authority has committed to maintain the overall level of free allocation until 2026. The Authority is now consulting on changes to free allocation methodology, with an aim to better target support at sectors most at risk of carbon leakage. This consultation is open until 11 March 2024 and can be found here: https://www.gov.uk/government/consultations/uk-emissions-trading-scheme-free-allocation-review

6. What is carbon leakage and why is it a risk?

• Carbon leakage is the movement of production and associated emissions from one country to another due to different levels of decarbonisation effort through carbon pricing and climate regulation.
• As a result of carbon leakage, the objective of decarbonisation efforts – to reduce global emissions – would be undermined.
• Carbon leakage risk could curtail private investment in decarbonisation to reduce industrial emissions, compromising efforts to avoid global warming.