The UK is set to become the first country to formally integrate carbon removals into a regulated compliance market, marking a significant shift in environmental policy that could reshape the economics of the carbon market. By 2029, carbon removal credits will be eligible under the UK’s Emissions Trading Scheme (ETS).
A British man holding biochar in his hand, with a lush UK forest in the background. AI generated picture.
This move gives long-awaited policy backing to a sector that has thus far relied on voluntary markets and early adopters like Stripe, Shopify, and Microsoft. While the global voluntary carbon market hovers around $2 billion, compliance markets are vastly larger, valued at over $800 billion. The UK ETS alone governs around 111 million tonnes of emissions annually. Even a modest 1% inclusion of removals could create a $53 million yearly demand for high-integrity carbon removal credits.
The government has confirmed legislation will be in place by 2028 to enable market entry by the end of 2029. This timeline balances the need for robust standards and infrastructure with the urgency of providing clear demand signals for investment today. ‘It’s not a license to pollute—it’s a tool to neutralise emissions that can’t be cut’, the government noted.
To qualify, carbon removals must meet strict criteria: They must be executed on UK soil, verified only after the carbon has been securely stored, and demonstrate permanence of at least 200 years. This focus on long-term storage effectively excludes nature-based solutions vulnerable to reversal, such as reforestation, and favours engineered removals like geologic storage and stable biochar.
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Additionally, the government is considering a two-tier system to distinguish between avoided emissions and carbon removals. This could result in separate pricing and treatment within the same market, one crediting reductions, the other rewarding atmospheric cleanup.
Auctions will facilitate transactions, providing a structured alternative to today’s fragmented bilateral deals. The overall emissions cap will remain unchanged, ensuring removals serve as neutralisers rather than offsets for new emissions.
The policy shift is expected to catalyse the UK’s emerging carbon removal industry. Startups like UNDO, which uses basalt to enhance natural weathering, and Mission Zero Technologies, developing modular direct air capture units, now have a path to revenue via compliance demand, not just philanthropic support.
As global net-zero ambitions take shape, the UK’s decision provides a template for turning promising carbon removal technologies into scalable, investable infrastructure. It’s a first-of-its-kind step that could push the carbon removals sector from experimentation into the economic mainstream.
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As carbon removals enter regulated markets and permanence becomes the new benchmark for credibility, the global focus is turning to high-integrity solutions with measurable, lasting impact. At DGB Group, we deliver precisely that—nature-based projects that generate premium carbon credits while restoring critical ecosystems, enhancing biodiversity, and uplifting local communities. In a landscape increasingly defined by transparency, durability, and verifiable outcomes, aligning your carbon-mitigation strategy with trusted, impact-driven solutions has never been more urgent. Explore how you can be part of this next chapter in environmental action, starting now.
