UK Government Backs Carbon Credit Trading: A Positive Step Forward. But What Comes Next?

UK Government Backs Carbon Credit Trading: A Positive Step Forward—But What Comes Next?

In a welcome move for climate-focused innovators and green businesses alike, the UK government has announced new support for carbon credit trading as part of its broader “Plan for Change.” The initiative is designed to boost trust, transparency, and financial flows in the voluntary carbon and nature markets, positioning the UK as a global leader in green finance.

For companies like Nellie Technologies, which work at the intersection of carbon dioxide removal (CDR), climate tech, and sustainable land use, this is an encouraging signal. But while the direction of travel is positive, the success of this strategy will depend on the robustness of the frameworks, the integrity of the credits, and the ability of smaller players to navigate an increasingly complex market.

What Are Carbon Credits?

At its core, a carbon credit represents one metric tonne of CO₂ either avoided or removed from the atmosphere. These credits can be bought and traded, enabling businesses to offset emissions that they are unable to eliminate directly.

Crucially, this system only works if the credits reflect real, additional, verifiable environmental outcomes. Projects can include everything from reforestation and renewable energy, to cutting-edge approaches like biochar sequestration—an area where Nellie is leading with its PhycoChar® product, derived from algae biomass and used as a soil-enhancing biofertiliser that locks away carbon.

The UK’s New Approach

The government’s new measures include:

• Setting clear standards for “high-quality” carbon credits.

• Encouraging businesses to disclose their use of carbon credits in annual sustainability reports.

• Providing a consistent regulatory environment to attract private investment.

These reforms aim to remove confusion in the marketplace and avoid the “greenwashing” accusations that have plagued parts of the voluntary carbon market in recent years. By championing integrity, the UK hopes to build investor confidence and unlock capital to scale up climate solutions.

As Energy Security and Net Zero Minister Justin Tomlinson put it, the goal is to “put British businesses at the forefront of the growing global carbon market.”

A Booming Sector—With Risks

The carbon market is poised for significant growth. According to government estimates, voluntary carbon markets could be worth up to $250 billion by 2050, with “nature markets” contributing an additional $69 billion.

Nellie Technologies has seen first-hand how much appetite exists for trustworthy, durable carbon removal solutions. Our work with industrial partners and agricultural users shows a growing demand for verified credits that deliver environmental co-benefits like soil regeneration, improved water retention, and enhanced biodiversity.

Yet, the risk is that in the rush to scale, quantity could come at the cost of quality. The lack of universal standards, complex verification protocols, and variable buyer expectations have left many producers and purchasers unsure about how to proceed. This is especially true for nature-based solutions and engineered removal technologies, which often don’t fit neatly into traditional carbon accounting frameworks.

Level Playing Field or Closed Shop?

One of the key questions facing the UK’s new plan is whether it will create a level playing field—or reinforce existing barriers to entry.

Large corporations with extensive sustainability teams and consultants will find it easier to navigate detailed reporting requirements, certification processes, and evolving disclosure rules. Smaller players—like early-stage startups or agricultural landowners—may struggle unless the system is designed with inclusivity in mind.

At Nellie, we welcome moves to enhance transparency and rigour, but we also believe strongly in democratising access to the carbon market. Innovation often comes from the margins, and it’s vital that new entrants are supported with clear guidance, proportionate rules, and affordable certification pathways.

What This Means for Nellie Technologies

For us, this announcement is well-timed. As we scale our CDR operations from hundreds to thousands of tonnes per year, the need for high-integrity credit markets is paramount. We are already engaging with digital MRV platforms and working with standards like Puro.Earth and the TRACEcdr tool from LSE to ensure that our credits meet the highest possible thresholds.

The UK’s emphasis on integrity plays to our strengths. Our credits are:

• Durable: PhycoChar® is stable for hundreds of years in soil.

• Additional: Our carbon removal is above and beyond business-as-usual.

• Verified: We embrace transparency and third-party audit readiness.

However, we also need to see that the market values these traits appropriately. High-quality removals often come at higher cost—and unless buyers are educated and incentivised to prioritise impact over price, there’s a risk that truly sustainable solutions get overlooked in favour of cheaper, less robust offsets.

Looking Ahead

The UK government’s push to build a trustworthy, scalable carbon market is a positive development. It provides clearer direction for businesses, creates new financial mechanisms for climate action, and signals international leadership in the green economy.

But implementation will be key. The framework must:

• Avoid excessive bureaucracy that stifles innovation.

• Incentivise long-term, high-durability carbon removal.

• Provide accessible routes to market for small and medium-sized enterprises.

• Align with global standards to ensure interoperability.

At Nellie, we’re optimistic—but watchful. We’ll continue to champion transparency, quality, and innovation in everything we do. And we look forward to working with government, buyers, and peers to ensure that carbon markets fulfil their potential—not just as a tool for offsetting, but as a catalyst for deep, structural decarbonisation.

To learn more about our carbon removal solutions or to purchase PhycoChar® credits, get in touch via our Contact page.

Read the full UK Government announcement here.