UK launches carbon market consultation as part of green finance ambitions

The UK government has opened a consultation on how to strengthen voluntary carbon and nature markets as part of its ambition to become “the global hub for green finance”.

The consultation aims to provide greater clarity around best practices in the generation and trade of voluntary carbon credits and nature credits, with the goal of supporting the movement of capital towards carbon and nature projects while creating new revenue streams for UK businesses.

“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,” said Climate Minister Kerry McCarthy.

“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.”

Six integrity principles for the voluntary carbon market

To unlock the funding potential of the voluntary carbon market – estimated to be up to US$250 billion by 2050 – the consultation focuses on six integrity principles, which will form the basis of a UK-driven global trust framework.

The principles state that suppliers should ensure credits meet recognised high-integrity criteria that ensure environmental benefits; buyers should measure and disclose the planned use of credits as part of their sustainability reporting; users should consider how credits feed into wider 1.5ºC-aligned transition plans; 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; and credits should only be used in addition to ambitious climate action within value chains.

Aligning with other integrity initiatives

These principles appear to be aligned with those of other integrity initiatives, such as the Voluntary Carbon Market Integrity Initiative (VCMI) and the Integrity Council for the Voluntary Carbon Market (ICVCM).

Mark Kenber, Executive Director, VCMI, 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.”

The consultation will run until  July 10, 2025, with the government seeking responses from industry organisations and the public.