Carbon Tax Glossary

The process of reducing carbon dioxide emissions through the use of low-carbon power sources, achieving a lower output of greenhouse gases into the atmosphere.

Achieving a balance between greenhouse gas emissions produced and emissions removed from the atmosphere. The UK has a legal target to reach net zero by 2050.

Nationally Determined Contributions - climate action plans submitted by countries under the Paris Agreement, outlining how they will reduce emissions.

An international treaty on climate change adopted in 2015, with the goal of limiting global warming to well below 2°C above pre-industrial levels.

A reduction in emissions of carbon dioxide or other greenhouse gases made to compensate for emissions produced elsewhere. Offsets are measured in tonnes of CO2 equivalent.

The total greenhouse gas emissions caused directly and indirectly by an individual, organisation, event, or product, expressed as CO2 equivalent.

The carbon dioxide emitted during the manufacturing, transport, and construction of materials and products, also known as embodied carbon.

Direct greenhouse gas emissions from sources owned or controlled by an organisation, such as emissions from company vehicles or on-site fuel combustion.

Indirect greenhouse gas emissions from the generation of purchased electricity, steam, heating, and cooling consumed by an organisation.

All other indirect greenhouse gas emissions in a company's value chain, including both upstream (supply chain) and downstream (product use) emissions.

The cost assigned to emitting one tonne of carbon dioxide equivalent (tCO2e). It can be set through carbon taxes, emissions trading schemes, or other mechanisms.

A fee imposed on the burning of carbon-based fuels (coal, oil, gas). It puts a price on each tonne of carbon dioxide (CO2) emitted, creating an economic incentive to reduce emissions.

Streamlined Energy and Carbon Reporting - UK regulations requiring qualifying companies to report their energy use and carbon emissions in their annual reports.

The potential negative impacts of climate change on assets, investments, and business operations. Includes physical risks and transition risks.

The Greenhouse Gas Protocol provides the world's most widely used greenhouse gas accounting standards for companies, governments, and organisations.

When businesses relocate production to countries with less stringent climate policies to avoid carbon costs, potentially increasing global emissions overall.

Carbon Border Adjustment Mechanism - a policy tool that puts a carbon price on imported goods to prevent carbon leakage and ensure fair competition between domestic and foreign producers.

A market-based approach to controlling emissions by setting a limit (cap) on total emissions and allowing companies to buy and sell emission allowances.

A permit that allows the holder to emit one tonne of CO2 or equivalent greenhouse gases. Allowances can be allocated free or auctioned and are tradeable.

The UK Emissions Trading Scheme, launched in January 2021 following Brexit. It is a cap-and-trade system that limits total emissions from covered sectors while allowing companies to trade emission allowances.