The UK government has rolled out new plans to strengthen voluntary carbon and nature markets. These markets help businesses reduce emissions. They do this by funding eco-friendly projects. Examples include tree planting, electric vehicles, and forest protection.
The government wants to boost these markets. This will bring in private funding, boost climate efforts, and create new revenue for British businesses. Landowners and farmers will benefit the most.
According to the Department for Energy Security and Net Zero, the UK’s total greenhouse gas emissions in 2024 were around 371 million tonnes of CO2 equivalent. That’s 4% lower than in 2023, when emissions were 385 million tonnes.
Compared to 1990 levels, emissions in 2024 dropped by 54%. Carbon dioxide was the biggest contributor, making up about 78% of the total emissions.
A Global Role for the UK in Green Finance
BeZero Carbon says that the UK has long been a pioneer in carbon markets. Back in 2002, it launched the first national greenhouse gas trading system.
Internationally, it has helped shape carbon rules under the Paris Agreement, including at COP29. Recent data reveals that UK companies are the top users of voluntary carbon credits in the G7. They lead in both total volume and GDP comparison.
Turning Potential Into Progress
Currently, carbon and nature markets aren’t reaching their full potential. Many businesses are unsure how to use carbon credits effectively, and poor practices in the market have raised doubts. To address this, the government is creating a global framework. This will set clear standards for what makes a carbon or nature credit effective.
The new guidance will:
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Define high-quality carbon credits
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Ensure projects deliver real environmental benefits
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Encourage companies to fully disclose how credits are used in sustainability reports
These steps aim to build confidence and help businesses invest in high-impact climate solutions. With the right conditions, the carbon market could grow to $250 billion and nature markets to $69 billion by 2050.
These new plans aim to make the UK a global leader in green finance. By creating a strong and trusted carbon market, the UK can attract more private investment, support climate goals, and help businesses shift to clean energy.
Taking climate action also brings major business benefits. Since July, the UK’s clean energy sector has drawn £43.7 billion in private investment.
According to the Confederation of British Industry (CBI), the net-zero economy grew three times faster than the rest of the UK economy last year, with over 10% more jobs created in the sector.
Carbon Credits in the UK
The Department for Environment, Food & Rural Affairs’ Woodland and Peatland Carbon Codes support local nature-based projects. These efforts have expanded, creating a solid foundation for growth. The government is also pushing engineered carbon removals through contracts for carbon capture and storage (CCS) technologies.
Climate Minister Kerry McCarthy said,
“Building up trust in carbon and nature markets is crucial to their success in driving meaningful climate action and real, lasting change for the environment.
The UK is determined to spearhead global efforts to raise integrity in these markets so they can channel the finance needed to tackle the climate crisis and speed up the global clean energy transition.
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.”
UK’s Carbon Market Strategy for 2035
A recent report titled “Making the UK the carbon markets capital of the world” from BeZero Carbon outlines what the UK could potentially achieve by 2035 if it leads in carbon markets:
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Create 135,000 skilled jobs
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Add £1 billion to tax revenue
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Meet domestic carbon removal targets (13 million tonnes from engineered sources and 5 million tonnes from nature-based projects)
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Attract £10 billion per year in private climate finance for international projects
To make this vision real, the UK must grow demand. The plan expects that by 2035, all major UK businesses will offset their remaining emissions. This includes both current and future emissions, using high-quality carbon credits. These would include nature-based and engineered solutions, sourced both from the UK and abroad.
What’s Needed to Get There?
To support this growth, the government should:
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Integrate international and nature-based carbon removals into the UK Emissions Trading Scheme
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Promote alignment with trusted standards like the Voluntary Carbon Markets Integrity Initiative (VCMI)
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Use independent ratings to ensure credit quality
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Develop smart regulations that encourage, not block, market expansion
The report explains that carbon credit markets are more reliable now than five years ago. New monitoring and verification technologies reduce the risk of credits failing. These tools are backed by science and data. The COP29 Article 6 framework also helps prevent double-counting between countries and businesses.
The UK can lead in climate investment. It can support innovation and set clear rules. Carbon and nature markets can help cut emissions. They can also boost the economy and enhance the UK’s global role in green finance with the right efforts.
When the government, businesses, and communities team up, the UK can create a strong carbon market. This will create jobs, boost the economy, and support a greener future for generations to come.
