Carbon Dioxide Removals, a UK perspective

Last year, at COP29, the UK unveiled its 2035 NDC, pledging an 81% reduction in economy-wide GHG emissions by 2035 from 1990 levels, excluding international aviation and shipping. COP29 also oversaw the full operationalisation of Article 6 of the Paris Agreement, enables countries to trade credits, aiding mutual NDC achievement.

There are two primary types of carbon markets: the compliance market and the Voluntary Carbon Market (VCM). The compliance market is regulated by regimes such as the UK Emissions Trading Scheme (UK ETS), where GHG emissions are capped, and surplus allowances can be traded. In contrast, the VCM is driven by corporate social responsibility and investor pressures to offset emissions and achieve sustainability targets.  

Crucial to the strength of Voluntary Carbon Markets are the need for integrity standards to ensure that carbon offsets achieve their claimed environmental benefits. More recently, there have been critiques of some projects generating carbon credits, calling into question the integrity of these markets¹. The Integrity Council for the Voluntary Carbon Market (ICVCM) and the Voluntary Carbon Markets Integrity Initiative (VCMI) are key endeavours aiming to ensure integrity within the VCM by developing minimum global quality thresholds and good practice for the supply and use of voluntary carbon credits.  

Global carbon markets are likely to experience significant growth by 2050. Key drivers of this growth are ambitious carbon neutrality targets from various market participants, including project developers, corporations, non-profits, governments, brokers, and traders. Verification and registry bodies ensure transparency, due diligence, and verifiability. Registries and rating agencies play a crucial role in the carbon market. Registries ensure that each carbon credit is uniquely identified, tracked, and retired once used, preventing double counting and potential for fraud. Rating agencies assess the quality and credibility of carbon projects, providing transparency and confidence to buyers. Projects sell credits to fund their initiatives, enabling them to continue their environmental and social efforts.  

Carbon removals are typically grouped as nature-based and engineered solutions. Nature-based credits result from reforestation and soil management projects that utilise natural processes to reduce GHGs. Engineered solutions rely on technologies such as Carbon Capture and Storage (CCS), typically Bioenergy with Carbon Capture and Storage (BECCS) or Direct Air Capture with Carbon Storage (DACCS). These technologies, though promising, face hurdles - Direct Air Capture costs remain high. For BECCS, sustainable sourcing of biomass is critical to deliver true removals, ensuring operators comply to strict sustainability criteria will be challenging, where non-sustainable sourcing is reported to have occurred to date².  

UK developments 

The UK government has ambitious aims to deploy at least 5 MtCO₂/yr of engineered removals by 2030, scaling up to around 75-81MtCO₂/year by 2050. Currently the UK pipeline of projects suggests that the 2030 target will be challenging to achieve. As well as these aims, the UK ETS authority is considering the inclusion of engineered removals within the UK ETS, aiming to incentivise investment and provide a source of demand for removals from polluting sectors, subject to robust monitoring, reporting, and verification (MRV) and the management of any wider impacts. A consultation was published in 2024, with the government response yet to be finalised. The UK Government have also recently published its own principles for the integrity of the voluntary carbon and nature market, with a focus on the need for the use of high integrity credits³. 

In addition, the UK is consulting on implementing a Carbon Border Adjustment Mechanism (CBAM), which is another critical element in this landscape. CBAM aims to ensure that importers pay the same carbon price as domestic producers under the UK ETS, thereby preventing carbon leakage and ensuring equal treatment for products made in the UK and imports from elsewhere. This mechanism will motivate importers to decarbonise their supply chains to remain competitive. Furthermore, the UK's CBAM is designed to align with similar measures being implemented by the EU, promoting a cohesive approach to carbon pricing across Europe.  

As well as this, the UK government, in collaboration with the British Standards Institute (BSI) are developing technology specific methodologies for engineered removals (such as BECCS and DACCS) to define the requirements around the quantification and MRV. Ensuring that carbon offsets achieve their claimed environmental benefits is crucial. As the energy transition develops, VCMs must address concerns around market strength, scalability, maturity, and integrity.   

More recently, the Climate Change Committee (CCC) published the Seventh Carbon Budget (CB7), outlining a pathway to further reducing UK emissions between 2038 and 2042. The ambitious recommendation from the CCC is to limit GHGs to 535 MtCO_2e. The ‘balanced pathway’ developed by the CCC includes carbon removals, with CB7 seeing the inclusion of more CDR methods, such as Biochar and Enhanced Rock Weathering (ERW) both providing 3% (0.6 Mt) of removals in 2040, growing to 8% (3 Mt) in 2050.