How carbon reporting software helps navigate carbon taxes

In 2022, 30 British companies were fined for not meeting the Climate Change Agreement requirements. In fact, 38% of UK businesses don’t reach decarbonization goals. With new emissions tracking and reporting legislations appearing all the time, it’s easy to become a part of these statistics.

Here’s a thing: staying compliant future-proofs your company. Emission trading and energy efficiency also give you cost benefits, and carbon offsetting programs secure your spot in the market and promote you as a green brand. And if carbon taxes and filing reports still drive you nuts, this guide is for you. 

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Why is emissions tracking so important?

To answer this question, we should look at how transportation and travel sectors pollute the environment. Overall, transport causes 21% of global CO2 emissions. This speeds up the greenhouse effect and increases the air temperature. The result? Extreme droughts, forest fires, and sudden rainfalls cut crop yields and food supplies. 

The harmful effect of emissions distributed among different types of transportation: 

• Road travel accounts for 75% of transport emissions 
• Freight trucks cause 29.4%
• Passenger vehicles contribute 45.1% of global CO2
• Aviation adds to 11.6% of transport emissions 
• International shipping brings about 10.6% of global carbon 
• Rail is the most eco-friendly transport, with only 1% of transport emissions 

Interestingly, though aviation is the intermediate one footprint-wise, it differs by region. In Europe, the aviation sector's emissions doubled over the past three decades. Overall, European transport emissions have surged by over 25% since 1990 and will cause 44% of all greenhouse gas emissions by 2030. The situation is pressing — and it calls for serious measures. 

What exactly are these new rules, and what do they mean for European and UK businesses?

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UK & EU regulations for emissions tracking

The UK and EU have implemented various regulations to track and reduce greenhouse gas emissions. These regulations aim to improve transparency, energy efficiency, and sustainability reporting across different sectors. 

Carbon legislation in the EU

The European Green Deal set an ambitious goal of zero net greenhouse emissions. Several even stricter directives have been introduced. Let’s break down some of them.

The EU Emissions Trading System (ETS) caps the total of greenhouse gases that can be emitted by covered sectors. Another regulation is the Carbon Border Adjustment Mechanism (CBAM), which aims to prevent carbon leakage by placing a carbon fee on imports of certain goods. Also, the Corporate Sustainability Due Diligence Directive (CSDDD) directs to identify and address adverse effects on the environment in their value chains.

The Fit for 55 package aims to reduce net greenhouse gas emissions by at least 55% by 2030 and proposes various corrections to policies and measures for transport companies. Last but not least, the most recent EU regulation is the Corporate Sustainability Reporting Directive (CSRD), which expands on previous non-financial reporting requirements. It mandates more detailed reporting on sustainability matters, including carbon emissions. 

UK regulations for carbon emissions 

The first one, ESOS (Streamlined Energy and Carbon Reporting), is a mandatory energy assessment program for large UK organizations to conduct comprehensive energy audits every four years. These audits help businesses identify significant areas of energy consumption and recommend cost-effective energy efficiency measures.

SECR (Energy Savings Opportunity Scheme) regulations aim to improve transparency and energy management in large companies. Under SECR, businesses must report their energy consumption, greenhouse gas emissions, and energy efficiency actions in their annual Directors' Report.

Some new sets of directives are in action, too. The Greening Government Commitments (GGC) set out the actions UK government departments and their agencies will take to reduce their climate impacts. Also, the Carbon Reduction Plan (CRP) is a document required by the UK government for large companies to outline their plans for achieving Net Zero emissions.

How companies adopt decarbonization and CO2 standards 

For companies operating in the UK and EU, carbon emissions reporting is no longer optional but a legal requirement. This shift stems from the recognition that you can't manage what you can't measure. Businesses must now disclose their sustainability efforts more clearly and consistently, adhering to ever more stringent CO2 standards.

These changes will greatly affect most businesses in the travel and transportation industries. For instance, those who rely on fossil fuels will pay more than those who switch to electric vehicles. In 2027, EU ETS will make gas stations to include the cost of pollution in the price they charge for fuel. Also, the new Eurovignette Directive introduces user-pays and polluter-pays principles for heavy-duty vehicles,

Many organizations turn to carbon reporting software to meet these challenges. Carbon management tools help businesses measure, analyze, and manage their carbon footprint. Here’s what you can do with carbon reporting software:

• Identify key opportunities for emissions reduction
• Develop strategic sustainability initiatives
• Track progress towards carbon neutrality targets
• Improve resource management and reduce wasteful spending
• Enhance their appeal to environmentally conscious customers and investors

Carbon emissions reporting software isn’t just a tool to tick off legal checkboxes – it’s your lifeline in the growing wave of sustainability demands. With carbon emissions tax and new regulations rolling in, staying compliant is more crucial than ever. 

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How carbon emissions tracking, reporting, and taxing works step-by-step

Here's a simple breakdown of how carbon emissions tracking, reporting, and taxing work:

1. Tracking: Businesses keep track of how much carbon dioxide (CO2) or other greenhouse gases they produce. This can come from things like fuel consumption, electricity use, and company vehicles. The goal is to measure their overall carbon footprint.
2. Reporting: Companies are required to report these emissions, usually on an annual basis. This gives the government, and sometimes the public, a clear idea of how much pollution is being generated by each business.
3. Taxing: To encourage companies to reduce their emissions, the UK government imposes a carbon tax. This means businesses have to pay for the amount of carbon they emit. The more they pollute, the more they pay. This tax pushes companies to find greener, more sustainable ways to operate.
4. Carbon Offset: If a company can't reduce its emissions to meet requirements, it can invest in carbon offset projects. These projects help absorb or prevent CO2 emissions elsewhere. By supporting these initiatives, companies can "offset" their own emissions while still meeting their environmental targets.

To precisely calculate all the emissions you should provide for taxation, you must understand emission scopes.

• Scope 1 emissions: Direct emissions from owned or controlled sources, such as company vehicles or on-site fuel combustion.
• Scope 2 emissions: Indirect emissions from the generation of purchased electricity, steam, heating, and cooling consumed by the company.
• Scope 3 emissions: All other indirect emissions in a company's value chain, including business travel, employee commuting, and waste disposal.

Now that we have figured out what scopes you should calculate to provide accurate carbon taxing, let’s take a broader look at carbon offsetting. What’s carbon offsetting, and how can you use it to your advantage?

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Carbon offsetting in the travel sector

Carbon offsetting is a process where companies invest in environmental projects to balance out their own carbon emissions. This can involve purchasing carbon credits. Each represents one metric ton of CO2 equivalent that has been reduced or removed from the atmosphere. Travel businesses use these credits to offset emissions from flights, accommodations, and other travel-related activities. They are combined and represented by various carbon offset programs. 

Carbon offsetting in the EU

While EU ETS is the main mechanism for reducing greenhouse gas emissions in Europe, it doesn't directly include the entire travel sector. However, aviation within the European Economic Area is covered by the EU ETS, requiring airlines to give allowances for their emissions. For other travel-related emissions, many businesses voluntarily engage in carbon offsetting.

Travel companies in Europe typically calculate the carbon footprint and offer customers the option to pay an additional fee to offset their portion of emissions. The European government introduced the carbon offset EU guide, outlining how to reduce carbon emissions by 50% by 2030. 

Here’s how to offset carbon emissions in Europe:

1. Identify reporting obligations. First, you should determine which regulations apply to you based on your size, sector, and location. This may include SECR, ESOS, EU ETS, or the revised ETD.
2. Calculate your emissions. After identifying your sources of energy, proceed to calculate your greenhouse gas emissions from all 3 scopes.
3. Determine intensity ratios. Next, relate your emissions to specific metrics (like revenue, and production output) to provide context and enable comparison over time.
4. Assess energy taxation. Under the revised ETD, businesses must consider the new taxation structure for different fuel types, with higher rates for more polluting fuels.
5. Identify efficiency measures. Outline the energy efficiency actions you take and plan to implement, like adopting low-carbon transport, renewable energy sources, or integrating carbon offset programs.
6. Conduct energy audits. For schemes like ESOS, you need regular energy audits to identify significant areas of energy consumption and potential savings.
7. Explore clean technology investments. In line with the ETD's goals, you should evaluate opportunities to invest in cleaner technologies and renewable energy sources.
8. External verification. Many schemes require third-party verification of emissions data to ensure accuracy and compliance.

Currently, carbon offset cost in the EU fell to around €62 per tonne. For an average travel business, this price is seen as moderate. At the same time, the total cost depends on the company's emissions. If they emit, for example, 1,000 tonnes of CO2 annually, the cost would be €62,000, which is significant for many SMEs.

Carbon offsetting in the UK

There’s a specific algorithm for how carbon offsetting works for travel companies in the UK:

1. The company measures and calculates its current carbon footprint, either using an online calculator or by hiring an energy consultant.
2. They implement strategies to reduce their own carbon emissions where possible. This includes methods like switching to renewable energy sources or improving energy efficiency.
3. For emissions that can't be eliminated, the company calculates the remaining carbon consumption and purchases carbon offsets to balance the difference. These offsets fund projects that reduce or remove greenhouse gases from the atmosphere, like planting trees or renewable energy initiatives.
4. Companies can seek certification as "carbon neutral" or aim for "net zero" once they've offset their total emissions. They often have this independently verified.
5. To ensure effectiveness, businesses should invest in accredited carbon offsetting schemes verified by the UK Environmental Agency, Verra, Plan Vivo, or Gold Standard.

Let’s dive into carbon offset accounting and overview reliable offset providers. 

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Сarbon offset accounting

Carbon offset taxes are financial mechanisms designed to motivate businesses to reduce their greenhouse gas emissions and invest in clean technologies and sustainable practices. Some business owners refuse to step in because of the higher operational costs, but there’s a silver lining. By reducing both carbon emissions and implementing energy-efficient technologies, you cut down on costs in the long term – you just need some time to see results!

European governments created the LEARN Project to provide businesses with better standardization and guidelines. The project promotes the Global Logistics Emissions Council (GLEC) Framework, a standardized method for calculating greenhouse gas emissions and emissions reporting. 

What carbon offset programs are there for companies?

Choosing the best carbon offset programs in the UK or EU isn’t an easy task. You should determine your goal, the closest achievable result, and the budget you can allocate for the optimal benefit. Here are your options:

• Tree planting carbon offset: These projects help lower carbon as trees grow and can also restore natural habitats, giving you carbon credits for offsetting your emissions.
• Renewable energy projects: Investing in wind, solar, or hydroelectric power helps reduce reliance on fossil fuels, potentially reducing your footprint and cutting electricity bills.

• Energy efficiency programs: Supporting projects that reduce energy consumption in buildings or industrial processes, you offset the amount of power spent on daily activities.
• Methane capture from landfills: These projects prevent potent greenhouse gases from entering the atmosphere.

The British government actively promotes these initiatives. For instance, Carbon Neutral Britain offers various carbon offset project types for businesses and individuals, all certified by the highest international standards.

In this vastness of options, you shouldn’t be alone. Your business is safe to rely on the B2B companies that provide carbon offsetting services and consultation and set specific programs for carbon offsetting. These companies provide carbon management software, emissions tracking tools, and carbon reporting software to help travel businesses effectively measure, report, and offset their carbon emissions.

Carbon offset providers in the EU

Several European companies offer carbon offsetting services, helping businesses and organizations compensate for their carbon emissions through various projects and initiatives.

• EcoAct offers carbon offsetting projects, sustainability consulting, and climate strategy development. They provide various options for carbon offsetting projects: improved cookstoves, afforestation/reforestation, improved forest management, fuel switching, wind energy, and biogas.
• ClimateTrade is a carbon offsetting platform, sustainability SaaS solutions, and corporate forests. It offers a blockchain-based platform for transparent transactions, and provides easy ESG reporting and certificates. It also supports various project types, including forest conservation, community projects, and renewable energy.
• GLS offers carbon-neutral parcel shipping in several European countries. It compensates emissions from parcel transportation, freight shipments, buildings, and business travel. Projects include forest protection, solar energy, and wind energy.

Many also offer additional services such as sustainability consulting, carbon footprint calculation, and reporting tools to provide comprehensive solutions for businesses. And what about the UK carbon offsetting providers?

Carbon offset companies for UK 

Among the carbon offsetting consulting and services companies, we can distinguish Blocicarbon. It uses blockchain technology for transparency and offers local carbon offsetting from Welsh farms. It also provides carbon calculators for various activities (flights, vehicles, energy usage)  and partners with organizations like Rhug Estate to track and offset carbon emissions.

Another notable example is Mabbett. It provides comprehensive carbon management consulting and services, including carbon footprint assessments, supply chain emissions management, and net zero strategy development. It’s known for following GHG Protocol, ISO 14064, and PAS 2060, also providing a third-party verification of carbon footprint disclosures.

In the great diversity of other existing carbon offset providers, you can also choose one of these:

• Terrapass offers a range of carbon offset products and helps businesses calculate their carbon footprint.
• Natural Capital Partners provides carbon-neutral certification and develops custom offset strategies for businesses.
• South Pole offers carbon credits and develops sustainability strategies for companies across various sectors.
• 3Degrees specializes in renewable energy and carbon offset solutions for businesses.
• My Carbon Plan is a not-for-profit focused on UK-based offsetting projects, particularly tree planting. They charge around £10 per tonne of CO2 offset.

Trying to work out how much carbon you're producing, what you need to offset, and how much it'll cost you in taxes without the proper tech is close to impossible. Our next stop is emissions management software – different types of it.

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Off-the-shelf carbon emissions management software for the UK and EU

The demand for carbon tracking and reporting software tools rises yearly. The growth is impressive: in 2023, the carbon management software market size has reached $15.1 billion already — and in 2032, this figure will be 38 billion! 

The variety of options in the footprint management software market allows you to choose the best-fit solution, from large enterprise platforms to specialized tools for niche industries or emission sources. Let’s break them down into the main carbon management software types.

Carbon management platforms for big enterprises

Big companies often use full-service carbon management software to handle their emissions. In the UK, there is a great variety of UK-based solutions. Think of Persefoni — they use AI to figure out carbon footprints and create reports that tick all the boxes for important guidelines like the GHG Protocol. And Watershed helps big businesses measure, report, and cut down their carbon output. 

There are options for businesses under EU jurisdiction, as well. For instance, the carbon management platform Plan A‍ is focused on decarbonization under the new ESG context. Another example is Sphera, an ESG management platform that provides emissions reporting and data management.

Here are the main strengths of large-scale software for carbon reporting:

• Track scope 1, 2, and 3 emissions 
• Integrate well with existing enterprise systems
• Provide advanced reporting capabilities aligned with popular frameworks

What about the weaknesses? They also have some:

• Often expensive and complex to implement
• May require significant staff training

When you pick between these, think about how well they match the reporting standards you need to follow. Your business size and structure are important points, too. For example, Coolset sustainability management platform, designed for mid-market companies, offers tools to measure carbon emissions, build reduction plans, and achieve CSRD compliance.

Industry-specific carbon tracking tools

Some tools are made just for specific industries, and in the EU, there are solutions for almost every niche. Vaayu, for example, is all about retail and online shopping. It automatically works out emissions from sales and shipping data. SINAI Technologies is more for heavy industries like factories or energy companies. They offer fancy features for predicting future emissions and planning how to reduce them. 

In the UK, some tools are also handy for different business sizes and sectors. Greenly, for example, is great for small businesses and helps simplify carbon footprint calculations. For the British manufacturing, energy, and real estate businesses, Climatise helps make the best use of their extensive data.

Here are the main strengths of such carbon emissions tracking software:

• Highly accurate calculations for specific sectors
• Often include industry benchmarks for comparison
• May offer specialized features like logistics carbon footprint calculators

However, they also come with some weaknesses:

• Limited applicability outside their target industry
• Don’t cover all aspects of a company's carbon footprint

Your choice here really depends on what industry you're in and what special features you need. Often, for specific functionality, you can’t rely on the ready-made solutions in one platform or tool. It especially concerns the supply chain, where the data can be scattered. What do you use, then?

Supply chain emissions calculators

Then there are tools focused on Scope 3 emissions — all the indirect stuff in your supply chain. The UK businesses have a variety of choices here. SupplyShift helps you work with your suppliers and gather all the data you need for thorough Scope 3 reports. Ecovadis checks suppliers and has a carbon action tool to manage the sustainability of your whole supply chain. 

You can use a GHG calculator from the European Commission to estimate emissions for Carbon capture and storage (CCS) projects. Another option is CarbonChain, which is suitable for both EU and UK businesses to get their EU CBAM and UK CBAM calculations.

Among the main strengths are:

• Detailed supplier engagement features
• Often include sustainability assessments beyond carbon
• Help identify emissions hotspots in the supply chain

And here are the main weaknesses:

• Require active participation from suppliers for optimal results
• Do not provide as much depth on direct emissions (Scope 1 and 2)

The key to successful carbon offsetting is to understand the characteristics of your supply chain and select projects that align with your sustainability goals. 

Carbon offsetting platforms

For unavoidable emissions, some platforms help you balance things out with carbon offset projects. For UK and US businesses, Patch makes it super easy to add carbon offsetting to your existing systems with their carbon offset API. 

The EU businesses can choose the EcoAct, which features certified projects that reduce, avoid, or remove greenhouse gas emissions. 

Such platforms have some benefits:

• Often offer a diverse portfolio of certified carbon offset projects
• Include features like a carbon offset API for easy integration
• Support various carbon offset project types (e.g., tree planting, renewable energy)

We should also note some of their weaknesses:

• Don't address emissions reduction directly
• Do not provide comprehensive emissions tracking

For a comprehensive solution that fits your business processes, needs, and desired outcomes like a glove, a custom travel API integration is the #1 way to touch base with your existing infrastructure. 

Transportation emissions trackers

There are also tools just for corporate travel and shipping emissions. For EU businesses, Greentripper calculates emissions from different types of transport and lets you offset them right there. Project44 shows you real-time emissions from your supply chain transport and is also powered by AI for large-scale data analysis.

For UK companies, the ICAO Carbon Emissions Calculator is great for working out air travel emissions by cargo, vehicle types, and other factors. Another great example is British Airways carbon offset program, letting passengers work out and offset their flight emissions. Travelers can purchase carbon offset credits for more sustainable travel.

Here are the main strengths of these emission tracking tools:

• Specialized features for travel-related emissions
• Often integrated with travel booking systems
• May include offsetting options directly tied to travel activities

Please also note their weaknesses:

• Don’t provide comprehensive corporate carbon accounting
• Redundant if using a more comprehensive carbon management solution

Our travel website development and design team can seamlessly integrate carbon emission trackers into your existing platform. We understand the unique needs of the travel industry and help you incorporate user-friendly carbon calculators for flights, operations, accommodations, and activities.

Ready-to-use carbon calculators

These tools offer quick, often sector-specific carbon calculations. For example, the carbon footprint calculator app by Sustainable Travel International allows individuals and small businesses from the EU to estimate their carbon emissions easily. For UK businesses, there are several free carbon footprint calculators like NatWest’s Carbon Planner.

Carbon calculators have their strengths:

• Easy to implement and use
• Often free or low-cost
• Good for engaging customers or employees in sustainability efforts

Weaknesses of these solutions:

• Often don't provide detailed reporting or management features
• Limited customization options

You may find that implementing and optimizing carbon management solutions isn’t possible without digital transformation. COAX helps you integrate various tools and streamline data collection and reporting to make the most out of your efforts.

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When custom carbon reporting software is better option

Off-the-shelf carbon reporting tools don’t always cover your business needs. Custom software, on the other hand, offers a tailored approach. It adapts to your business processes and is built with your workflow in mind. Another plus is seamless integration, which ensures smooth data flow and reduces the risk of errors or inaccuracies. 

Last but not least, custom carbon reporting software helps you stay compliant with cap and trade systems. Simply put, it ensures compliance with your allowance limits. With simple and accurate emissions reports, you can track and compare your emissions against the cap and assess whether you need to purchase additional allowances or sell excess ones.

Our mobile developers can create a travel mobile app that tracks carbon emissions and aligns perfectly with your existing systems. We have a successful case of integrating carbon reporting functionality into our client’s product. Let’s see it in more detail.

Case study: Integrating carbon reporting and taxing module

The module uses emissions tracking algorithms based on engine type, fuel, distance, and route. Then, it estimates emissions taxes owed by transport companies so users view their tax liability and pay directly through the platform. For transport operators, the system provides detailed fleet emissions reports. They can track trends over time, identify high-polluting vehicles, and make data-driven decisions about fleet upgrades or route optimizations.

The results for Driven Connect's clients have been impressive. Transport companies find it easier to comply with emissions regulations. And since enterprise-level clients have opted for bus services over individual cars, their choices have already taken 80 cars off the road. It’s a small change that makes a big difference.

Carbon taxes, emissions tracking, peace of mind

What's compliant today might not meet tomorrow's standards. This is where custom carbon reporting software truly shines, as custom solutions are very flexible. As new reporting requirements emerge, the software can be quickly updated to accommodate them. 

Besides, as your business grows and changes, your custom software grows with you, so there’s no need to switch to a new system. Instead of juggling separate tools for emissions tracking, reporting, and compliance, you get a single, unified system, you get multiple functions in one place. Moreover, custom software is designed with adaptability in mind from the start. It incorporates modular components that can be upgraded as needed.

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FAQ

What is emissions tracking?

Emissions tracking is the process of calculating and monitoring greenhouse gas emissions produced by an organization's activities. 

What is carbon offset accounting?

Carbon offset accounting means calculating carbon emissions reduced or removed from the atmosphere through offset projects. It involves quantifying, verifying, and reporting these reductions to balance out an organization's carbon footprint.

What are carbon taxes in the UK?

In the UK, carbon taxes are primarily implemented through the UK Emissions Trading Scheme (UK ETS) and the Climate Change Levy (CCL), which sets a cap on emissions for certain sectors and permits the trading of emissions allowances. The CCL is an energy tax delivered to non-domestic users in the UK.

What is the relationship between the LEARN Project and EU climate goals?

The LEARN Project aligns with the EU's broader climate goals by supporting the transport sector in reducing its carbon footprint. It contributes to the EU's efforts to achieve significant emissions reductions and move towards more sustainable logistics operations.

What are some carbon offset project types?

Common carbon offset project types include renewable energy (wind, solar, hydroelectric), forestry and conservation, methane capture from landfills, and energy efficiency improvements.