The UK government announced the launch of a new consultation into a series of “integrity principles” for carbon and nature credits, aimed at helping to advance the development and growth of voluntary carbon and nature markets.
The consultation comes as demand for carbon offset projects and related credits is expected to increase significantly over the next several years, with the UK government forecasting the carbon market to grow to $250 billion by 2050 for carbon markets, and $69 billion for nature markets, under the right conditions, as companies utilize credits as a bridge to their absolute emissions reduction efforts, or to balance difficult to avoid emissions. The unregulated and rapidly growing market faces a series of challenges, however, with market participants unable to differentiate between high- and low-quality projects with insufficient or inconsistent data to assess the effectiveness of the projects.
In a statement announcing the launch of the consultation, the government said:
“Currently these markets are not realising their full potential, with a lack of clarity among businesses and organisations on how they can be used, and some poor practice impacting their effectiveness in delivering meaningful climate action and economic growth. There have been widespread calls from businesses and organisations for greater clarity in how to use these markets as part of their plans to reach net zero.”
In order to address the markets’ integrity issues, the government said that it is launching the new principles to provide a framework to build trust and increase confidence in carbon and nature credit trading, adding that it aims to “strengthen the UK as the green finance capital of the world.”
UK Climate Minister Kerry McCarthy said:
“These principles will cement the UK as the global hub for green finance and carbon markets. This is an opportunity to deliver on the climate crisis and drive investment and growth in the UK as part of our Plan for Change.”
The new consultation focuses on six key integrity principles covering suppliers, buyers, and market participants. The principles include:
- suppliers should ensure credits meet recognised high integrity criteria that ensure credits deliver environmental benefits
- buyers should measure and disclose the planned use of credits as part of sustainability reporting
- users should consider how credits feed into wider transition plans that align with the 1.5°C goal of the Paris Agreement
- claims involving the use of credits should accurately communicate an organisation or product’s overall environmental impact, including by using appropriate and accurate terminology
- market participants should cooperate with others to support the growth of high integrity markets
- credits should only be used in addition to ambitious climate action within value chains
The consultation will remain open through July 10, 2025. Click here to access the consultation.
