UK backs businesses to trade carbon credits and unlock finance

British businesses and organisations will be better supported to trade carbon credits as part of new work to establish the UK as the global hub for green finance – driving growth and investment while tackling the climate crisis through the Plan for Change.

The government has launched plans to strengthen voluntary carbon and nature markets which can help leverage the finance needed to address the scale of the climate emergency whilst diversifying revenue streams for British businesses.

These markets support the trading of carbon credits, where a business can reduce their emissions by investing in environmentally friendly projects such as deploying electric vehicles, reducing deforestation, removing carbon dioxide through carbon dioxide or planting trees.

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 response, the UK is establishing a global framework to build trust and confidence in carbon and nature credit trading, with a set of principles to guide and support businesses on how to use carbon credits that provide environmental benefits. This includes making clear what a good credit is, ensuring they are delivering environmental benefits and encouraging businesses to fully disclose what they are being used for in annual sustainability reporting.

These markets are estimated to be worth up to $250 billion by 2050 for carbon markets, and $69 billion for nature markets, under the right conditions. By increasing confidence in these markets, British businesses – including farmers and land managers –  will be well positioned to seize the economic rewards by creating new revenue streams and investment opportunities. 

These plans will further strengthen the UK as the green finance capital of the world – leading the way in a new growth market, unlocking private finance for climate change and backing businesses on the clean energy transition.  

Positive climate action can lead to significant growth opportunities for UK businesses with the UK seeing £43.7 billion of private investment into UK’s clean energy industries since July. Recent figures from the CBI shows that the net zero economy grew 3 times faster than the economy as a whole last year, with employment in the sector up by over 10%.

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