UK: Government confirms approach to voluntary carbon and nature markets

The UK government, on 12 November 2026, published its response to the 2025 consultation “Voluntary carbon and nature markets (VCNM): raising integrity”.  The consultation built on the Principles for Voluntary Carbon and Nature Market Integrity that the UK published at the 2024 UN climate summit (COP29).  Having received 200 responses, the government published a summary of these responses in March 2026, highlighting strong support for action on integrity, a need for clarity and international alignment on what a “high-integrity credit” is, and how it should be used.

It is clear from the response that the government recognises the opportunity that carbon and nature markets offer, noting that the UK’s sustainable finance sector includes a “thriving ecosystem” of carbon and nature market services.  The government has considered, and is trying to support, use cases for the credits.  There is a strong focus, not just on the high integrity of credits, but on creating demand for credits and encouraging these markets to develop.  The response recognises, and seeks to address, challenges identified by respondents to the consultation – such as those around clarity, international alignment, and the skills / knowledge gap – which can act as barriers for businesses developing clear cases to invest.

The government’s response is set out under four key priorities:

Priority 1: Taking direct action within value chains

While focusing on carbon and nature markets in this consultation response, the government confirms its support for organisations focusing its efforts on reducing emissions and environmental impacts, with the use of credit markets complementing, rather than replacing, this approach.  It supports “insetting”, where a company funds emission reductions or removals within its own supply chain, particularly for hard-to-abate indirect supply chain emissions (referred to as “Scope 3” emissions) in the forest, land and agriculture (FLAG) sector.  The response notes, however, that purchased credits are generally reported separately and cannot be deducted from a company’s greenhouse gas (GHG) inventory.

With respondents seeking further clarity on insetting, the response points to the Greenhouse Gas Protocol’s Land Sector and Removal Standard, published after the VCNM consultation had closed.  Defra is also designing a “Soilshot” pilot to channel business finance into soil health and support uptake of insetting interventions.

Priority 2: Supply – supporting integrity and scale

The government has moved away from its proposal to formally endorse the Integrity Council for the Voluntary Carbon Market’s (ICVCM) framework as a minimum standard for high-integrity credits.  Instead, it has identified the Paris Agreement Crediting Mechanism (PACM) and ICVCM’s Core Carbon Principles (CCPs) as the key benchmarks for identifying high-integrity carbon credits.  The response does not create a new legal obligation, but rather buyers are encouraged to prioritise credits meeting one or both of these standards where supply exists, and crediting programmes are encouraged to align over time.  The government also encourages buyers to use independent carbon credits ratings to check the quality of individual projects.

Specifically in the UK, the government is:

• developing an engineered greenhouse gas removal (GGR) standard with the British Standards Institution (BSI), aligned where possible with the EU Carbon Removal Certification Framework (CRCF);
• expanding the UK Nature Investment Standards (NIS), with biodiversity and nutrient standards being launched in March 2026.A nature-based carbon standard is expected in 2027, and a Community Engagement and Benefits Code of Practice is due in early 2027;
• addressing the need for balance between inconsistent self-assessment and an as yet under-developed third-party accredited certification by ensuring a minimum 2-year period of self-assessment against the NIS, before moving to independent certification by bodies accredited by the United Kingdom Accreditation Service (UKAS), with a pilot assurance framework running from 2027 to 2029;
• launching a detailed market discovery phase to identify high-priority areas for capability building to address gaps in current and future market activity, as outlined in Defra’s Growing Places publication; and
• addressing shortages of validation and verification (V&V) professionals, the independent checks that confirm project outcomes before credits are issued.

The Woodland Carbon Code applied for ICVCM endorsement in November 2025 and assessment is underway.

Priority 3: Demand – driving credible use of credits

From 2035, there is intended to be a mandatory role for high-integrity credits under the Science Based Targets Initiative’s (SBTi’s) Corporate Net Zero Standard (version 2.0).  The government welcomes this approach in its response and encourages earlier responsible market use ahead of 2035.  Where companies publish transition plans, it considers it best practice to explain whether and how credits support their decarbonisation strategy.

Claims will continue to be policed through existing rules, rather than the government creating a UK-specific standard.  The Advertising Standards Authority (ASA) guidance on terms such as “carbon neutral” and “net zero” remain the key reference, with the ASA forming part of a new Carbon and Nature Markets Regulator Forum.  The remit of the Forum will be to improve market functioning.

Safe harbour measures – ie government-backed protections – have been suggested as a mechanism to de-risk market activity.  The International Emissions Trading Association (IETA) was commissioned to elaborate on possible safe harbour options that could be implemented.  The government intends to respond to the IETA’s recommendations in due course, considering how the proposed safe harbour measures could support early alignment with international demand-side standards by UK organisations.

On compliance markets, the government is integrating GGRs into the UK Emissions Trading Scheme (UK ETS).  This significant development was confirmed in July 2025, forming a key step in building a long-term, robust market for high-integrity GGRs in the UK, with legislation due by the end of 2028 and integration to be operational by the end of 2029.  Additionally, the government is implementing the international aviation offsetting scheme, the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), with legislation on CORSIA offsetting expected in the not too distant future.

Other demand measures include:

• continuing to input into the development of international demand-side standards, and test options to accelerate business implementation of international demand-side frameworks;
• reflecting support for demand-side use cases in future guidance and policy;
• further consideration of a formal incentive scheme that recognises organisations that are implementing the guidance due to be published in Spring 2027;
• exploring how best practice can be reflected in policies around procurement best practices.

Priority 4: Market enablers – strengthening frameworks and infrastructure

Most respondents considered the legal and accounting status of credits unclear. The response supports legal clarity, international consistency and a more coordinated market oversight.  The government considers that the Property (Digital Assets etc) Act 2025 now provides a suitable framework for digital and intangible assets and has decided against statutory definitions of credits for now, to preserve flexibility. This reflects the Law Commission’s conclusions in its Digital Assets: Final Report, published in 2023, that voluntary carbon credits may be structured as intangible property.  Legal advice it commissioned supports the view that Woodland Carbon Units can be intangible assets. Accounting treatment is left to the UK Endorsement Board (UKEB) and international standard setters.

A new UK Carbon and Nature Markets Regulator Forum will bring together government departments, the Financial Conduct Authority (FCA), the ASA, the Environment Agency, Natural England, the Forestry Commission and devolved regulators to map responsibilities and recommend future priorities. Its effectiveness will be reviewed after an initial phase in the first half of 2027.

Separately, Defra may fund a pilot of a voluntary, industry-led Environmental Market Governance Scheme for nature markets. The government has decided not to trial "stacking" (combining payments for several environmental benefits from the same land), relying instead on principles set out in its "Growing Places" publication.

What should I do?

The response brings clearer expectations, but no new legal obligations at this stage.  In practice, businesses should take steps to align with the CCP and PACM principles at any early stage, including:

• incorporating these principles into net zero and transition plans and procurement strategies, as well as considering independent ratings and ensuring statements in those plans reflect current ASA guidance;
• for project developers and landowners, considering early alignment with the CCPs, PACM, the GGR Standard or relevant NIS will help you to prepare for the shift from self-assessment to accredited certification for nature projects;
• ensuring value chain contracts clearly set out title, delivery, retirement and replacement of credits where applicable;
• keeping records of due diligence, risks and claims, recognising where these actions focus on or are aligned with principles around high-integrity credits.

Next steps

The government has clearly favoured adopting international standards over introducing new UK rules, which should help businesses operating in more than one country and work towards consistency across carbon and nature markets.  The approach remains voluntary at this stage, and it is recognised that the adoption of benchmark credits may carry a price premium, which may be too high for smaller UK nature projects.

The response outlines a number of actions for the government to focus on to support the progression of high-integrity carbon and nature markets:

• Initial phase of UK Carbon and Nature Markets Regulator Forum (H1 2027, with a review to follow);
• Publication of practical step-by-step guidance for organisations on the use of carbon credits (Spring 2027);
• Developing the GGR Standard;
• Pilot of the UK NIS assurance framework (2027-2029).

Alongside these actions, the government intends to continue its international cooperation, promoting greater consistency, interoperability and integrity across markets.  The response also highlights the importance of continued stakeholder engagement, and welcomes further evidence and feedback from organisations engaged with carbon and nature markets.