The UK government’s climate strategy and the importance of London as a global hub for carbon trading were the focus of a speech by Zoe Norgate, deputy director, International Net Zero – Green Finance and Capability, UK Department for Energy Security & Net Zero, at the City and Financial International Carbon Markets Summit 2024.

London is ranked as the world’s leading green finance centre, and carbon markets are an important element of this. The latest edition of Z/Yen’s biannual Global Green Finance index, ranking 96 locations, showed London clinched first place for the fifth time in a row since October 2021. London won out against all its European rivals despite gloomy forecasts predicting Brexit would lead to a dilution of standards in the UK’s financial services sector.

The UK Department for Energy Security & Net Zero has been been given key responsibilities and priorities for carbon markets to ensure properly functioning energy markets and to make sure that the UK is on track to meet its legally binding net-zero commitments.

Transition to clean power

Norgate set out the new UK Government’s initiatives and approaches ahead of COP 29.

She said the UK is a major hub for carbon markets and London is home to an extensive ecosystem of market actors and innovators including banks, insurers, ratings agencies, and the London Stock Exchange. “The UK will become the first major economy to transition to clean power by 2030”, said Norgate.

The new UK government has set out an ambitious agenda for tackling climate change, both internationally and domestically, she continued, referencing the British Prime Minister’s speech at the recent UN General Assembly, where he talked about the existential threat of climate change happening “here and now.”

The UK government has lifted the de facto ban on onshore wind in England, ended the granting of new oil and gas licenses for the North Sea, and created Great British Energy, Prime Minister Keir Starmer has said. He also stated that the UK “will meet its net-zero target, backed up with an ambitious NDC [nationally determined contribution] at COP29, consistent with limiting warming to 1.5 degrees, and we’ll support others to do the same.”

Domestically, the government is also taking action through the compliance scheme by expanding the UK Emissions Trading Scheme (ETS), which “will be key to achieving the government’s mission to make Britain a clean energy superpower, and achieve 100 clean electricity by 2030,” said Norgate.

Global carbon markets

On carbon markets, Norgate said there had been changes in the landscape for global carbon markets. “On one hand, the overall value of voluntary markets and the amounts of carbon finance reaching developing countries has fallen but on the other hand, I think we have seen progress in tackling the underlying causes of this volatility,” she told the gathering.

There have been integrity initiatives which offer more clarity to the market said Norgate, with “outputs already being used and driving improved practise.”

International coordination is helping to standardize and increase transparency. Last week, there were agreements in Baku towards finalizing Article 6.4. The Article 6.4 Supervisory Board, the body working on creating the UN carbon market under the Paris Agreement, has finalized two key standards related to carbon removal and developing and assessing projects for a UN-supervised carbon market.

“These bring the the prospect of a global carbon market mechanism that could leverage hundreds of billions one step closer”, said Norgate.