British businesses focus on domestic carbon credits in their quest for a net-zero target
In a significant move towards achieving net zero targets, 86% of organizations have set net zero targets, with the most common approach aiming for net zero by 2035. This shift is reflected in the confidence of senior decision-makers, as 92% are optimistic that their organizations will meet these targets.
One of the key factors driving UK businesses to prefer UK-based carbon credits is the trust in the quality and verification standards. These credits require verified carbon removals with a minimum 200-year carbon storage under evolving UK government standards, offering clearer pricing and reduced risks compared to some international markets.
The integration of UK-based removal credits into the UK Emissions Trading Scheme (UK ETS) by 2029 provides a regulated and transparent compliance market, which enhances confidence for buyers and investors and supports scaling of local carbon removal technologies. This integration offers a unique advantage over credits from other jurisdictions, particularly those with less rigorous oversight or voluntary standards.
UK-based credits also support domestic natural capital projects, such as woodland carbon projects, which have strong local ecological co-benefits and are closely aligned with national climate goals. By contrast, carbon credits from other jurisdictions may vary significantly in terms of regulation, verification rigor, and permanence.
Senior decision-makers cite a lack of understanding around credits as the leading obstacle to UK businesses buying carbon credits, with only 42% able to accurately define what carbon credits are. However, this knowledge gap is a crucial next step to closing, as the report highlights.
Notable exceptions among institutions include Canada's CPP Investments and Temasek, which are actively involved in carbon credit initiatives and supporting the development of carbon markets. Pension funds, insurance companies, and sovereign wealth funds have not shown the same enthusiasm as tech giants like Microsoft, Google, and Amazon in buying carbon credits. However, pension funds tend to invest in carbon credits as a by-product as part of their wider forestry strategy.
A significant finding in the report is that 76% of senior decision-makers would be more likely to buy carbon credits if they were UK-based. This preference for UK-based carbon credits is due to the greater assurance of emissions reductions and removals aligned with UK climate policy, enhanced trust through rigorous verification, and direct support for domestic net zero innovation and natural capital projects.
Despite the progress, there is still work to be done. Fewer than 42% understood the distinction between removal and avoidance credits, indicating a need for increased education and transparency in the carbon credit market. As the race to net zero intensifies, understanding and trust in carbon credits will be crucial for businesses to make informed decisions and contribute effectively to the global fight against climate change.
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