As the UK pursues its net zero target, understanding the full impact of the emissions associated with domestic consumption is key to credible climate policy. The current UK national carbon accounting framework focuses on territorial emissions, capturing emissions released within the country’s geographic boundaries. In doing so, it omits consideration of emissions associated with the relocation of production overseas—a process often referred to as offshoring—and those embedded in imports.

Policymakers should be mindful that offshoring can not only fail to reduce global emissions but may, in some cases, increase them—both due to the emissions generated by transporting goods to the UK (goods that were previously produced and consumed domestically but are now produced elsewhere and imported) and the potentially higher carbon intensity of production abroad.

Future Energy Networks (‘FEN’) commissioned Oxera to examine the role of carbon reduction as a result of industrial offshoring in the UK’s transition to net zero. This study aims to contribute to the evidence base informing the policy debate on decarbonisation via industrial offshoring and its implications for the UK’s climate strategy. The summary document and technical annex are available to read and download.