The UK government has initiated plans to strengthen voluntary carbon and nature credit markets, aiming to mobilise climate finance and support British businesses in diversifying their revenue streams.
These markets facilitate the trading of carbon credits, enabling businesses to invest in eco-friendly projects, such as deploying electric vehicles and planting trees, to offset their emissions.
The new initiative is part of the UK’s Plan for Change, designed to position the country as a global hub for green finance.
This move is expected to drive growth and investment while simultaneously addressing the climate crisis. However, the current state of these markets is not reaching their full potential due to unclear guidelines for businesses and some ineffective practices.
The UK is creating a global framework with a set of principles to guide businesses in using carbon credits responsibly to improve market effectiveness.
This framework aims to build trust, ensure environmental benefits, and promote transparency in sustainability reporting.
The carbon and nature markets have the potential to be worth up to $250bn and $69bn, respectively by 2050, under optimal conditions.
By bolstering confidence in these markets, British businesses, including farmers and land managers, will be able to tap into new revenue streams and investment opportunities.
Nature Minister Mary Creagh said: “It is why increasing trust in these markets will ensure that they benefit both people and our planet, ensuring money flows towards genuine environmental improvement projects and creates new sources of finance for farmers and land managers in the UK.”
The UK’s commitment to green finance is further demonstrated by the £43.7bn ($57.8bn) of private investment in clean energy industries since July and the net zero economy’s growth rate, which is three times faster than the overall economy.
The government’s consultation is aligned with a regulatory approach that supports growth, including a recommendation from the Corry Review to launch a Nature Market Accelerator.
Voluntary Carbon Markets Integrity Initiative (VCMI) executive director Mark Kenber said: “Businesses need clarity and confidence to invest in voluntary carbon and nature markets that help meet global climate goals. This consultation from the UK government plays a vital role in delivering this.
“VCMI welcomes the proposal to recognise our Claims Code as international best practice, as well as the global leadership shown by the UK’s proposal to incentivise greater action by companies to address their unabated Scope 3 emissions through the inclusion of our forthcoming Scope 3 Action Code of Practice. The Code of Practice will enable companies to go further, faster and with integrity on climate action.”
Earlier this month, the UK government shortlisted 27 hydrogen-powered projects in its second Hydrogen Allocation Round (HAR2).
