UK strengthens carbon and nature credit markets to promote green finance

To boost climate finance flows and help local companies expand revenue channels, the UK government recently announced a new plan to strengthen voluntary carbon and nature credit markets. This initiative is an important part of the UK's green transformation strategy, which aims to make the country a global leader in green finance, not only to help achieve climate goals, but also to drive investment and economic growth.

First, the carbon credit market provides companies with a channel to support environmental projects by purchasing carbon offsets, such as developing electric vehicles or planting trees, thereby indirectly offsetting their own carbon emissions. Despite the broad prospects, these markets currently face challenges in operation, including the lack of unified guiding principles and the lack of actual results of some projects, resulting in the market potential not being fully released.

In response, the UK government is working to establish a globally applicable guiding framework that intends to regulate companies' use of carbon credits through a set of systematic principles. The framework aims to increase market transparency, enhance the credibility of environmental results, and encourage companies to be more standardized in sustainable development reporting. In an ideal development state, it is expected that by 2050, the total value of the global carbon market and nature market is expected to reach US$250 billion and US$69 billion, respectively. By increasing trust in the market mechanism, the UK hopes to attract more companies, especially farmers and land operators, to actively participate in carbon and nature credit transactions, thereby opening up new income and financing channels for them.

Secondly, Mary Krieger, the UK Minister for Natural Environment, pointed out: "We want to enhance the confidence of the public and investors in these markets and ensure that the investment is truly used to improve the environment while bringing economic benefits to agricultural practitioners and land managers." Since July last year, the total investment of the UK private sector in the clean energy sector has reached 43.7 billion pounds (about 57.8 billion US dollars), and the growth rate of the net zero-related economic sector is three times that of the overall economy, which fully reflects the UK's firm commitment to green finance.

In addition, this policy of the government has also received positive responses from many relevant institutions. The "Cory Review" once proposed the establishment of a "natural market accelerator" to accelerate the development of the natural capital market. At the same time, Mark Kember, executive director of the Voluntary Carbon Market Integrity Initiative (VCMI), said that companies need clear policy guidance and sufficient confidence when they are involved in carbon and nature markets. He said: "The UK government's consultation mechanism will play a key role in promoting the achievement of global climate goals."

Furthermore, VCMI also welcomes the UK government's proposal to include its "Carbon Reduction Action Statement Code" in international standards, and recognizes the UK's global leadership in the proposed "Scope 3 Emissions Code of Conduct". The code will provide an operational path for companies to more effectively deal with scope 3 emissions that have not yet been reduced, and promote companies to move forward faster and more trustworthy in the process of carbon reduction.

Finally, the UK approved 27 related projects in the second round of hydrogen project allocation (HAR2) earlier this month, further demonstrating its determination in green energy transformation. This policy initiative on carbon and nature credit markets, initially released by Energy Monitor, an energy brand under Global Data, marks a solid step forward for the UK on the road to green finance and sustainable development.

In summary, by strengthening the carbon credit and nature credit markets, the UK government is building a green financial system that not only serves the country's net zero goals, but also contributes to sustainable economic growth. This series of policies not only provides companies with a clearer path and incentive mechanism, but also creates new development opportunities for traditional industry groups such as farmers and land managers. With the improvement of the regulatory framework, the improvement of market confidence and the strengthening of investment vitality, the UK is gradually moving towards becoming a global green finance hub. In the future, the deepening development of the carbon and nature credit market is expected to play a more critical role in the global climate governance structure, helping to achieve the dual goals of environmental protection and economic prosperity.