A joint report from the City of London Corporation and the UK Carbon Markets Forum, which together represent key parts of the UK’s financial and carbon markets ecosystem, sets out the current scale of the country’s carbon credits industry and highlights what they say are significant growth opportunities that could be lost without coordinated policy support.
According to analysis by these organisations, the UK carbon credits economy currently contributes around £1.2bn a year and supports more than 11,000 jobs.
Their report also noted that the global carbon market is expected to expand rapidly, with its size expected to grow from approximately $1.4 billion currently to $267.9 billion by 2050 under favorable conditions.
The City of London Corporation and the UK Carbon Markets Forum stressed that while the UK is in a leading position internationally, this advantage is not guaranteed as competition intensifies.
In their publications, Seizing the UK’s carbon credit opportunity: measuring value to take action, The two agencies identified a number of factors they believe will drive demand for carbon credits in the coming years.
These include increasing energy consumption associated with artificial intelligence and data infrastructure, emissions requirements in the international aviation framework, developments under Article 6 of the Paris Agreement, corporate net zero standards and the increasing use of carbon credits within regulated emissions trading systems.
The report, written and published by the City of London and the UK Carbon Markets Forum, describes the UK as having a well-established ecosystem for carbon market services. It highlights the country’s position in carbon insurance, an area where insurance value has been recorded impressively and global premiums are expected to grow significantly in the future.
It also points to the presence of major rating and verification companies such as Sylvera and BeZero Carbon, as well as the trading infrastructure dominated by Intercontinental Exchange, which facilitates large-scale carbon trading activity. The organizations further noted that the UK has become a key location for engineered carbon removal operations, attracting billions of dollars of investment in recent times.
In addition to financial services, the City of London and the UK Carbon Markets Forum have highlighted the contribution of carbon markets to the wider economy across the country.
Their findings show that most nature-based carbon projects are located outside London and the south-east, with investment flowing into rural areas, agriculture and environmental restoration.
They estimate that billions of dollars have been invested in carbon-related projects in the UK in recent years, supporting land management initiatives such as woodland and peatland restoration, which generate wider environmental benefits including mitigating flooding, improving biodiversity and improving air quality.
Throughout the report, both organizations stress the importance of government involvement in shaping the future of the industry. They outlined several areas where they believe policy action is needed, including providing clearer guidance on how companies use carbon credits, establishing recognized quality standards, and supporting companies to make credible environmental claims.
They also highlighted the UK’s potential role in influencing the development of international carbon markets and the need for a clear domestic strategy to reduce greenhouse gas emissions, as well as measures to encourage greater investment in natural assets.
The City Corporation and the UK Carbon Markets Forum said responsibility for the work spans across government departments, including HM Treasury, the Department for Business and Trade, the Department for Energy Security and Net Zero and the Foreign, Commonwealth and Development Office. They believe a coordinated approach is needed between these sectors to ensure the UK can maintain and expand its role in global carbon markets.
In comments accompanying the report, representatives from the UK Carbon Markets Forum and the City of London Corporation viewed carbon markets as an increasingly important part of the UK financial services industry, noting their role in attracting international investment and supporting economic activity.
They also pointed to the growing demand for carbon credits associated with emerging technologies and stressed that future success will depend on whether the industry is considered a strategic priority in national economic and climate policies.
Chris Hayward, Chairman of Policy at the City of London Corporation, commented: “Carbon markets are an important and growing part of UK financial services, creating over a billion pounds of economic value, supporting thousands of jobs and attracting billions of dollars of investment from around the world.
“As AI accelerates global demand for carbon credits, the City of London is well positioned to become home to this market. But this status is not guaranteed. We call on the government to treat carbon market development as the strategic priority for industry and financial services that it deserves.”
