A joint report from City of London Corporation and 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 credit sector and highlights what they describe as a significant growth opportunity that could be lost without coordinated policy support.
According to the organisations’ analysis, the UK carbon credit economy currently contributes around £1.2 billion each year and supports more than 11,000 jobs.
Their report also points to the rapid expansion expected in global carbon markets, estimating growth from approximately $1.4 billion today to as much as $267.9 billion by 2050 under favourable conditions.
The City of London Corporation and the UK Carbon Markets Forum emphasise that although the UK holds a leading international position, this advantage is not guaranteed as competition increases.
In their publication, Seizing the UK’s Carbon Credit Opportunity: Measuring Value to Enable Action, the two bodies identify a number of factors they believe will drive demand for carbon credits in the coming years.
These include rising energy consumption linked to artificial intelligence and data infrastructure, emissions requirements in international aviation frameworks, developments under Article 6 of the Paris Agreement, corporate net zero standards, and the growing use of carbon credits within regulated emissions trading systems.
The report, authored and published by the City of London Corporation and the UK Carbon Markets Forum, describes the UK as having a well-developed ecosystem across carbon market services. It highlights the country’s position in carbon insurance, where significant insured value has already been recorded and future global premiums are expected to grow substantially.
It also points to the presence of major ratings and verification firms such as Sylvera and BeZero Carbon, alongside trading infrastructure led by Intercontinental Exchange, which facilitates large-scale carbon trading activity. The organisations further note that the UK has become a key location for engineered carbon removal businesses, attracting billions in recent investment.
Beyond financial services, the City of London Corporation and the UK Carbon Markets Forum underline the broader economic contribution of carbon markets 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 directed into UK carbon-related projects in recent years, supporting land management initiatives such as woodland and peatland restoration, which in turn generate wider environmental benefits including flood mitigation, biodiversity improvements, and better air quality.
Throughout the report, both organisations stress the importance of government involvement in shaping the future of the sector. They outline several areas where they believe policy action is needed, including providing clearer guidance to businesses on how carbon credits can be used, establishing recognised standards for quality, and supporting companies in making credible environmental claims.
They also highlight the UK’s potential role in influencing international carbon market development and the need for a clear domestic strategy on greenhouse gas removals, alongside measures to encourage greater investment in natural assets.
The City of London Corporation and the UK Carbon Markets Forum indicate that responsibility for these efforts spans multiple parts of government, 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 argue that a coordinated approach across these departments will be necessary to ensure the UK can maintain and expand its role in global carbon markets.
In commentary accompanying the report, representatives from the UK Carbon Markets Forum and the City of London Corporation frame carbon markets as an increasingly important component of the UK’s financial services sector, noting their role in attracting international investment and supporting economic activity.
They also point to the growing demand for carbon credits linked to emerging technologies and emphasise that future success will depend on whether the sector is treated as a strategic priority within national economic and climate policy.
Chris Hayward, Policy Chairman of the City of London Corporation, commented: “Carbon markets are a significant and growing part of the UK’s financial services offer – generating over a billion pounds of economic value, supporting thousands of jobs and attracting billions in investment from around the world.
“As AI accelerates global demand for carbon credits, the City of London is well-positioned to be the home of that market. But that position is not guaranteed. We are calling on government to treat carbon market development as the industrial and financial services strategy priority it deserves to be.”
