Explainer: Net Zero & Carbon Trading 

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The RSS Climate Change Task Force have produced a series of explainers to help people understand the statistics and data underpinning our understanding of climate change. This explainer addresses the “Net Zero” target, which the UK has committed to reach by 2050, with many other countries and organisations making similar commitments.

This explainer addresses important questions around the concept of “Net Zero” – what it means, how carbon emissions are calculated, and why those calculations are often contested. 
 

Q1:  What does "Net Zero” mean? 

Net zero means all greenhouse gases emitted due to human activities into the atmosphere by a country or organisation are balanced out by greenhouse gases removed. 

Q2:  How is "Net Zero” defined for the UK’s target? 

Net zero in the UK’s 2050 target refers to Territorial emissions, i.e. emissions that occur within the UK’s borders1, with the addition of the UK’s share of emissions from international aviation and shipping. These are defined by an international standard set by the IPCC (Intergovernmental Panel on Climate Change) through their 2006 Guidelines for National Greenhouse Gas Inventories (2006) and the 2019 Refinement, which was then agreed by the United Nations Framework Convention on Climate Change (UNFCCC) for reporting greenhouse gas emissions.  

Although international aviation and shipping are reported as “memo items” in national greenhouse gas inventories rather than included in country totals, they are included in the UK’s net zero by 2050 target.  

For the UK’s net zero target, greenhouse gases are carbon dioxide plus methane, nitrous oxide and various fluorinated gases (HFCs, PFCs and SF6, as defined in the Kyoto protocol, with NF3 added in the Doha Amendment). Some countries’ net zero commitments only include carbon dioxide – the International Energy Agency (IEA) maintains a Climate Pledges Explorer which has more detail. 

The UK’s latest international greenhouse gas emissions target, or Nationally Determined Contribution, was submitted in early 2025. The UK’s target is to reduce all greenhouse gas emissions by at least 81% by 2035 compared to 1990 levels (the ‘base’ year). Net UK emissions for 2024 were 373.4 million tCO2e (tonnes of carbon dioxide equivalent), a 53% reduction in net greenhouse gas emissions from the base year. The UK’s domestic targets are called Carbon Budgets and set out in the 2008 Climate Change Act - a Carbon budget and growth delivery plan was recently published. The UK Department for Energy Security and Net Zero (DESNZ) compiles and publishes the UK’s annual statement of emissions also known as the net UK carbon account, which is the metric to determine whether the UK’s Carbon Budgets are being met – the latest is here.  

Q3:  Where can I find data about the UK’s net emissions? 

DESNZ publish territorial emissions twice each year, initially provisional and then final.   

There are other estimates of UK emissions with a different scope – for more details on the definitions refer to the Office for National Statistics (ONS) Measuring UK Greenhouse Gas Emissions. ONS publish residence-based emissions statistics as part of the Environmental Accounts and Defra publish the UK and England’s carbon footprint.  

Q4: How do we calculate emissions and removals for a country such as the UK? 

In simple terms, we add them up by assessing activities sector by sector using all available statistics and models or assumptions about the activities. To estimate the total contribution of emissions and removals of each gas to global warming, ‘global warming potentials’ estimated by the IPCC are used to put the total emissions into tonnes of carbon dioxide equivalent (tCO2e). 

Emissions are calculated for a large number of different activities. Many emissions calculations are a straightforward multiplication of activity data with an emissions factor – for example, emissions from gas-fired power stations can be estimated using the total tonnes of natural gas consumed in power stations in a given year, multiplied by the amount of carbon dioxide emitted per tonne, with a similar calculation to estimate the methane emissions (in this case from leakage) and so on for each activity and each greenhouse gas. For some sectors the calculation is more complicated, for example landfill emissions follow an exponential decay, gradually decreasing in line with the life of the landfill, while soil carbon emissions are at the forefront of scientific development with understanding of the processes still being improved and feeding into improvements to models. 

The IPCC emission factor database provides a repository of emission factors and other parameters which countries can use in national inventories. Under the IPCC guidelines for national inventories there are three tiered methods, which use different emission factors: 

• Tier 1: Basic methods using default data – using a default emission factor 
• Tier 2: Intermediate methods with more specific national data – using a country-specific emission factor 
• Tier 3: Detailed, country-specific methods using complex models and datasets – using a specific emission factor for each technology or facility 

Many countries such as the UK estimate their own country-specific emission factors so that the estimation of emissions is as accurate as possible; the UK aims to use tier 3 methods and emission factors where possible. The emission factors used for the UK’s inventory are published on the National Air Emissions Inventory (NAEI) website – e.g. Energy Background Data includes emission factors for the energy sector. 

Emission factors can be estimated based on: 

• Stoichiometry, i.e. understanding how many carbon atoms are in a chemical compound given the tonnes of carbon dioxide per tonne of combustible/chemical, assuming that combustion or an industrial process involves a complete conversion of chemicals 
• Various research projects, e.g. the 2004 review of carbon emission factors is used for many of the estimates up to 2004, or the 2022 report on upstream oil and gas 
• Real-world measurement – e.g. collecting and analysing the emissions from a power station (or a cow!); for installations which are part of the Emissions Trading Scheme there is independent third-party verification 

Removals are calculated in a similar way. These include Direct Air Capture (DAC) which takes carbon dioxide directly out of the atmosphere; Carbon Capture Usage and Storage (CCUS) which captures carbon as it is created (for example by burning fossil fuels or biomass such as wood – also known as Bioenergy with Carbon Capture and Storage, or BECCS), and other Greenhouse Gas Removals (GGR) technologies.  

The Land Use, Land Use Change and Forestry (LULUCF) sector can also result in net removals of greenhouse gas emissions from the atmosphere, for example through forests removing more carbon dioxide than they emit. These emissions and removals are included in national totals under the IPCC guidelines when they take place on ‘managed land’. Managed land is defined as “land where human interventions and practices have been applied to perform production, ecological or social functions.” 

Q5:  What is the level of uncertainty in the UK’s emissions and removals? 

As well as point estimates for each source of emissions, there is an uncertainty attached to each estimate to reflect uncertainty in both the activity data and the emissions factors. In Tables 4.1 and 4.2 of the Final greenhouse gas emissions statistics, statistical uncertainty estimates are provided for each greenhouse gas and each sector, in the form of the 2.5 and 97.5 percentiles as well as a percentage of the 2024 emissions estimate; the overall uncertainty in the UK’s greenhouse gas emissions is estimated at ±3% but this is higher for greenhouse gases beyond carbon dioxide. The UK’s national and international targets are based on the central estimate and do not take account of uncertainty. 

Table 4.3 of the Final greenhouse gas emissions statistics demonstrates how the emissions estimates for a specific year have changed over time – generally due to improved methods and data; each year the whole time series back to 1990 is recalculated to enable year-on-year comparisons on a like-for-like basis. DESNZ publish planned methodology changes and include details on revisions in the Final greenhouse gas emissions statistics publication each year. Figure 1 shows the time series of UK greenhouse gas emissions back to 1990 for different publication years, from 2010 to 2026. 

 

 

Figure 1. Estimates of UK greenhouse gas emissions in MtCO2e (million tonnes carbon dioxide equivalent) from 1990 to the latest available year based on the year of publication. Data published in 2010 are for 1990 to 2008; data published in 2026 are for 1990 to 2024. 

Within the UNFCCC there is also a peer review process - the Technical Expert Review - where expert reviewers review the data and methods for each country’s greenhouse gas inventory (and other information countries are required to submit as part of the Paris Agreement).  

Q6: How do companies do their carbon calculations? 

The Greenhouse Gas Protocol 2004 (produced by the World Resources Institute (USA-based NGO) and the World Business Council for Sustainable Development (Geneva-based coalition of companies)) is a framework companies often use for their emissions. It defines three ‘scopes’ of emissions, for the purpose of drawing a system boundary around the emissions (and removals) that are included, and a company’s net zero claim may be limited to their Scope 1 emissions, or may include Scope 2 and/or 3: 

• Scope 1: Direct emissions from owned or controlled sources.   
• Scope 2: Indirect emissions from the generation of purchased energy.   
• Scope 3: All other indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions. 

The UK government publishes conversion factors for company reporting of greenhouse gas emissions. The scope of the factors is defined such that it is relevant to Streamlined Energy and Carbon Reporting (SECR) regulations. The conversion factor spreadsheets provide values for converting an organisation’s activities (e.g. distance travelled, litres of fuel used, tonnes of waste disposed) into greenhouse gas emissions and include step-by-step guidance on how to use them. 

For example, emissions from electricity used by a company uses the UK electricity table from the conversion factors as given below for 2026 to calculate Scope 2 emissions: 

Activity	Type	Unit	Year	kg CO2e	kg CO2e of CO2 per unit	kg CO2e of CH4 per unit	kg CO2e of N2O per unit
Electricity generated	Electricity: UK	kWh	2026	0.13096	0.12943	0.00067	0.00086

 

If a company had used 20,000 kWh of electricity, they would multiply 20,000 by 0.13096 to get 2,619 kgCO2e, or 2.6 tCO2e.  

Q7: What are some areas of debate? 

The calculation and reporting of carbon emissions and removals can be challenging. Calculations often rely on many supporting academic papers or on emissions factors which take a national or regional average. Where emissions estimates are made by those with an incentive to keep net emissions low this can introduce a possible bias. This might include neglecting to include the entire life-cycle of products and services, choosing inappropriate models and double-counting. Choice of standards and approaches may be influenced by the need to demonstrate the lowest possible emissions. The models and assumptions involved in converting counts and surveys of activities into hard figures are critical.  Not only does the main calculation require assumptions and models but the counterfactual is also hard to define and needs its own assumptions – to say what the emissions savings are, we have to be able to say what the emissions would have been without the project. For the UK, the independence of the statistical experts who follow the Code of Practice for Statistics helps to minimise bias. 

The choice of scope (i.e. where the system boundary is drawn) can impact whether emissions estimates are driving the right behaviour i.e. resulting in an actual reduction of emissions, rather than shifting emissions elsewhere. Generally national targets are territorial based so only include emissions and removals that occur within a nation’s borders. This ignores emissions embedded in imported goods and services consumed by the nation – which are instead included in the emissions of the country where they take place. Often emissions from international aviation and shipping are excluded, although aviation emissions are being addressed internationally by schemes such as CORSIA. The OECD publishes datasets on international aviation and maritime emissions. The IPCC and UNFCCC national inventory scopes do not include carbon dioxide emissions from biomass combustion if the biomass is imported, as they are instead reported at the point of harvest as a change in carbon stock. 

For carbon trading schemes, where companies can buy credits to offset emissions in order to reach net zero emissions, it is important that any credits represent actual emissions avoided or removed. There are questions of permanency – i.e. whether emissions reductions are permanent, particularly in the case of forest carbon credits where the trees could subsequently be cut down. Leakage can also be an issue – this refers to where deforestation might be relocated to another jurisdiction and so the net impact is less than is claimed by credits. The same emissions savings can be counted towards both a country’s national targets and a company’s net zero claims. Efforts are currently being made to tighten regulation of carbon trading schemes.  For example, both the EU and UK have Emissions Trading Systems and some voluntary carbon crediting schemes are enforcing regulation.