Source · Select Committees · Environmental Audit Committee
Recommendation 26
26
Accepted
Paragraph: 141
Launch promised consultation on global voluntary carbon markets without further delay
Recommendation
We applaud the UK Government and civil society for leading the way in building a global voluntary carbon market. We appreciate the difficulty of achieving a global price for carbon, but it is ultimately needed to prevent a race to the bottom where industries flock to headquarter in jurisdictions with the lowest penalties for polluting the planet and derailing the Paris Agreement to limit global warming to 1.5°C. A global price for carbon would also help to remove the perverse incentives in individual nations’ carbon pricing schemes such as the UK emissions trading scheme, where high-emitting industries may be inadvertently subsidised to prevent capital flight. We recommend that the Government launch its promised consultation on voluntary carbon markets without delay.
Government Response Summary
The government accepts the recommendation and states its intention to publish a consultation on voluntary carbon markets in early 2024. This consultation will seek views on government and regulatory interventions to enable market growth, endorse IC-VCM and VCMI outputs, and explore a new labelling scheme for UK credits.
Paragraph Reference:
141
Government Response
Accepted
HM Government
Accepted
The UK Government recognises the potential role that voluntary carbon markets could play in the delivery of domestic and international net zero, noting that market integrity concerns need to be addressed to maximise this opportunity. We welcome the progress made in 2023 to improve the integrity of VCMs, including the work of the Integrity Council for the Voluntary Carbon Markets (IC-VCM) and Voluntary Carbon Market Integrity Initiative (VCMI), both launched under the UK’s COP26 Presidency to develop international best practice. Building on this, the UK Government will consult on potential next steps, seeking views on the role of specific government and regulatory interventions to enable the growth of high-integrity voluntary markets in the UK and beyond, maximising synergies between carbon and nature markets where appropriate. As announced at COP 28, the consultation will include the Government’s intention to endorse the outputs of ICVCM and VCMI, and consider how these could be reflected in UK policy, regulation and guidance. The consultation will also test demand for a new labelling scheme for UK credits, in addition to our existing work with the British Standards Institution to develop Nature Investment Standards. We intend to publish the consultation in early 2024. The UK is a strong supporter of carbon pricing, through both domestic action and our support for international uptake using our aid budget, technical exchanges, and advocacy through the PM-endorsed Global Carbon Pricing Challenge. But progress on this takes time, and the early movers in decarbonisation risk having their actions undermined by carbon leakage. That is why the UK announced that we will implement a carbon border adjustment mechanism (CBAM) by 2027 to ensure that UK decarbonisation efforts lead to a true reduction in global emissions rather than displacing carbon emissions overseas. The delivery of the CBAM will be subject to further consultation in 2024.