- The UK carbon credit economy generates £1.2 billion annually and supports more than 11,000 jobs, a new report finds.
- Global carbon credit markets are projected to grow up to 190 times by 2050, from $1.4 billion today to as much as $267.9 billion.
- The UK is already the global leader in carbon market services - but growth is not guaranteed without coordinated government action.
The City of London Corporation and the UK Carbon Markets Forum have published the first comprehensive quantified assessment of the UK’s carbon credit economy.
The report, ‘Seizing the UK’s Carbon Credit Opportunity: Measuring Value to Enable Action’, finds that the UK is a global leader in carbon markets, but warns that without clear and coordinated government action, that advantage could be lost as international competition intensifies.
The global carbon credit market is currently valued at $1.4 billion but could reach anywhere between $15.8 billion and $267.9 billion by 2050, depending on policy and demand outcomes. The report identifies five near-term demand drivers: AI and data centre growth, aviation compliance under CORSIA Phase 2, country-level trading under Article 6 of the Paris Agreement, corporate net zero guidance from the Science Based Targets initiative, and the integration of carbon credits into compliance markets including the UK and EU emissions trading schemes.
The UK already plays a pivotal role in shaping how carbon markets operate worldwide, with strengths spanning every major component of the ecosystem:
- Insurance: The UK is the world’s leading carbon insurance market, with over £380 million in insured carbon value in 2025 and global premiums projected to reach £30 billion by 2050
- Ratings and verification: The UK is home to two of the world’s top five carbon ratings agencies, Sylvera and BeZero Carbon, which have raised more than $200 million in investment
- Trading infrastructure: London-based Intercontinental Exchange (ICE) traded $1.4 trillion in carbon value in 2025, spanning major global compliance markets including the EU ETS, California, California and CORSIA.
- Carbon removal: The UK ranks second globally for engineered carbon removal companies, attracting $2.5 billion in investment between 2023 and 2025
Economic impact across the whole of the UK
The report is explicit that the benefits of carbon markets extend well beyond London and the South East. Only 1.5% of UK nature-based carbon projects are located in the South East, with the vast majority generating economic activity and land management investment in rural and regional areas.
Between 2023 and 2025, $3.5 billion was invested into UK carbon projects and businesses, with significant capital flowing into rural land, farming systems and nature-based solutions. Woodland and peatland projects linked to carbon credits now protect more than 100,000 hectares of natural landscape, generating an estimated £500 million annually in wider ecosystem services including flood protection, biodiversity and air quality improvement.
Dame Clara Furse, Chair of the UK Carbon Markets Forum, said: “As demand grows for high integrity carbon credits, including from energy-intensive emerging technologies, the question is how markets channel this capital at scale. The UK already has a sophisticated financial and professional services ecosystem that is well placed to support Carbon Markets growth. This report shows that with the right policy framework, the UK can lead in scaling markets that deliver real climate impact and long term economic value.”
Six priority actions for government
The report sets out six priority actions for government to maximise the UK's share of global carbon market growth:
- Champion carbon market use: Provide businesses with clarity and support to plan future credit use, through regulated pathways or endorsement of voluntary standards.
- Help define quality: Set or endorse a quality threshold that gives developers, investors and businesses long-term confidence to invest in impactful projects.
- Help protect corporate claims: Support UK businesses in making credible claims on credit use, protecting them from greenwashing risk.
- Build global capacity: Use the UK's international influence to promote high-integrity carbon credits and support capacity building in emerging markets.
- Develop a UK greenhouse gas removals strategy: Provide developers and investors with clarity on domestic demand and maintain support for credit inclusion in the UK ETS.
- Incentivise nature investment: Unlock returns from the UK's underutilised natural capital assets through targeted nature investment incentives.
The report notes the opportunity spans at least four government departments: HM Treasury (financial services exports and revenue), the Department for Business and Trade (industrial growth and inward investment), the Department for Energy Security and Net Zero (net zero delivery), and the Foreign, Commonwealth and Development Office (global influence and market development).
Chris Hayward, Policy Chairman of the City of London Corporation, said: "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."
