Startup Coalition, the policy voice of UK tech startups, has released a report that calls on the UK Government to position the nation as a global hub for high-tech carbon markets, essential for accelerating its net-zero goals.
The report, titled More than Hot Air, emphasizes the critical role of the carbon markets sector in reducing emissions and fostering sustainable economic growth and showcases the UK’s $2.1 billion (£1.7 billion) carbon markets startup ecosystem.
With over $1 billion in investment and 1,500 employees nationwide, these startups are pioneering innovations like carbon capture technologies and satellite monitoring of reforestation projects.
However, the report warns that a lack of government action and policy uncertainty is stalling growth in this vital sector.
Carbon markets operate by assigning a cost to carbon emissions, enabling organizations to purchase carbon credits representing one ton of carbon dioxide (CO2) removed or avoided.
These credits play a significant role in voluntary carbon markets (VCMs), which address emissions outside of government-regulated schemes like the UK’s Emissions Trading Scheme.
Despite its potential, the VCM has faced setbacks due to insufficient government support, so Startup Coalition is urging the government to expedite consultations on the VCM’s role in achieving net zero, currently slated for early next year.
Relevant: COP29: UK Launches Principles For Carbon Market Integrity
The report also advocates for new tools to help small businesses quantify emissions and calls for increased use of data in carbon accounting.
To address greenwashing concerns, the coalition recommends a regulatory “sandbox” for companies to collaborate with authorities on marketing practices for carbon credits, particularly those developed by innovative startups.
With startups in the carbon credit supply chain valued at nearly $2.5 billion, a robust carbon market is crucial for growth and decarbonization, Dom Hallas, Executive Director of Startup Coalition, said.
“This should be a win-win for a Government laser-focussed on growth but with ambitious net-zero commitments to meet,” he added.
According to Valerio Magliulo, CEO of UK-based climate tech company Abatable, the UK has the potential to lead the next era of high-integrity voluntary carbon markets, unlocking critical finance for climate solutions and driving sustainable growth.
The release of the report follows Prime Minister Keir Starmer’s recent announcement of plans to increase the UK’s climate ambition, committing to an 81% reduction in emissions by 2035 compared to 1990 levels.
Read more: COP29: UK PM Unveils Ambitious 81% Emissions Reduction Target By 2035
