Government should set up a programme for offsets and carbon credits, providing guidance to businesses looking to invest in carbon credits and offsets, for businesses looking to provide carbon credits and offsets, and explore the opportunities to create a market in the UK for offsets through energy efficiency measures. |
1086. With 60% of FTSE100 companies committed to a Science Based Target in 2021,772 there is considerable scope for businesses to invest in offsets, and the Review has heard from numerous stakeholders showing a keen interest in investing in the VCMs. Similarly, the value of the global VCMs increased more than fivefold from 2018 to 2021.773
1087. This shows the potential for the VCMs to mobilise considerable investments in emissions reductions, particularly if those investments are channelled to credible and transparent credits and offsets.
1088. VCMs could support accelerated emissions reductions in areas that have not had sufficient public investment need increased financial flows, such as ecosystem restoration and engineered GGRs. Whilst VCMs have the benefit of providing financial flows from developed to developing countries,774 providing investors with credible greenhouse gas removals or efficiency gains in the UK could also attract investments into the UK.
1089. VCMs can provide a model for UK investments. VCMs have not had much deployment in bringing investments into the UK, but there is potential for VCM investments in the UK to work as a model for inward investments in nature-based and engineered GGRs as well as energy efficiency measures if the Government endorses sufficient standards of transparency for investors.
1090. Government needs to explore a regulatory framework for nature-based removals. On nature-based GGRs specifically, the release of land to net zero consistent use choices could provide opportunity for private green investment in enhancing natural capital in the UK. Natural England highlighted to the Review that businesses are looking for places to invest, with low risk, and have found that challenging.775 Government needs a regulatory framework that sets standards for carbon removals to drive innovation across industry as well as improve the credibility of companies' net zero claims, promoting market confidence. As the Wildlife Trusts commented in the Review's Call for Evidence:
"Almost all aspects of carbon and other environmental markets could benefit from regulation of quality and resulting impact on both the demand (for claims made by buyers) and supply side (for credit-generating projects), or at least a form of standard accreditation (for schemes themselves)."776
1091. The Government should endorse international VCM standards as soon as possible and consult on formally adopting regulated standards for VCMs and setting up a regulator for carbon credits and offsets by 2024. Voluntary carbon markets can have an essential role to support the UK to decarbonise, creating financing tools for innovation and nature-based solutions both in the UK and abroad. Ensuring these markets are credible is essential, providing investors with more certainty and confidence in VCMs and driving investments.
1092. The Government should set up a programme for offsets providing guidance to businesses looking to invest in carbon offsets, for businesses looking provide carbon credits and offsets, and explore the opportunities to create a market in the UK for offsets through energy efficiency measures.