We’re used to thinking of carbon markets as a punishment mechanism—a tax in disguise for those who pollute. But what happens when the same system starts to reward the people actively cleaning up the atmosphere?
After months of consultation, the UK government has laid out a clear path: greenhouse gas removals—including engineered solutions like direct air capture (DAC) and enhanced weathering—will become part of the country’s carbon market by the end of this decade. If you’re in the weeds of carbon policy, this is a watershed moment. If you’re not, here’s why it matters: it means corporations will soon be able to buy carbon removal credits in a regulated market—and carbon removal companies will, for the first time, have a predictable, price-driven demand signal for cleaning up the atmosphere.
Why This Changes the Game for Carbon Removals
Until now, carbon removals—like DAC, biochar, or enhanced weathering—have mostly lived in the voluntary market, propped up by early-adopter buyers like Microsoft, Stripe, and Shopify through initiatives like Frontier.
But voluntary demand is tiny. Currently the global voluntary carbon market is worth just $2 billion. By contrast, the global compliance carbon market—driven by schemes like the European Union’s Emissions Trading System, California’s Cap-and-Trade, and now the UK Emissions Trading system (ETS)—is valued at over $800 billion.
Right now, the UK ETS covers around 111 million tonnes of carbon emissions annually across the power, industrial, and aviation sectors. The average price of a UK allowance in July 2025 is around $48 per tonne. Even if just 1% of UK ETS obligations are fulfilled through removals, that’s a potential $53 million market annually for removals.
And here’s the key: this isn’t a hypothetical. The UK has committed to legislating integration by 2028, with removals entering the market by the end of 2029. That timeline is long enough to allow for standard setting and infrastructure development, but near enough to start attracting real investment now. For a sector that’s often lived off philanthropic capital and early adopter corporate buyers, this is oxygen.
Clear Rules: Local, Verified, Long-Term Storage Only
What does this mean in practice? First, only removals that take place on UK soil will be eligible—this ensures that the benefits of investment (jobs, infrastructure, monitoring, reporting, and verification capabilities) stay local. Second, removal credits will be awarded after the carbon has been verified to be sequestered, not in advance. That’s important. It signals a clear move away from the “pay-now-promise-later” dynamic that has plagued lower-integrity offset markets.
Perhaps most importantly, only removals that can demonstrate carbon will be stored for at least 200 years will qualify. That threshold effectively draws a line in the sand: no reforestation credits that could reverse in a few decades. The UK is saying, if you want an allowance, your removal better last two centuries. That’s a powerful signal to companies focused on permanence—those relying on mineralization, geologic storage, or stable biochar.
A Two-Tiered Market, and a Market-Making Mechanism
The government has also indicated it is “minded to differentiate” between these new removal credits and existing allowances—potentially creating a dual-credit system. In other words, a tonne of avoided emissions and a tonne of removed carbon might be priced and treated differently. That opens up the potential for two carbon markets to exist side-by-side: one punishing emitters, the other incentivizing removers. It’s a nuanced idea, but if done well, it could provide flexibility while preserving environmental integrity.
There will be auctions to facilitate a route to market—helping removal operators sell their credits into a structured and transparent system, rather than relying solely on opaque bilateral deals. The government will also maintain the existing “gross cap”—that is, the total amount of allowances won’t increase to accommodate removals. This ensures that carbon removals don’t create space for additional emissions. It’s not a license to pollute—it’s a tool to neutralize emissions that can’t be cut.
Some of this might sound arcane, but it reflects a growing maturity in how we think about removals. Climate science is clear: reaching net zero means both cutting emissions and removing what we can’t avoid. The UK is the first country to bake that second half of the equation into its compliance market architecture.
From Pilot Projects to Carbon Infrastructure
This decision is also a direct boost to the UK’s emerging carbon removal ecosystem. Take UNDO, a recent XPRIZE winner, which spreads finely crushed basalt on farmlands to accelerate natural weathering processes—permanently storing carbon in soils. Or Mission Zero Technologies, a direct air capture startup developing modular electrochemical systems that capture CO₂ from ambient air and store it underground. Both are UK-based, and both could now see a real, regulated path to monetizing their impact—not through donations or hype cycles, but through policy-anchored carbon demand.
And this matters beyond the UK. Globally, the carbon removal sector must grow from removing tens of thousands of tonnes of CO₂ per year to billions by 2050. That means turning niche science projects into bankable infrastructure. It means shifting from tech demonstrations to projects that institutional investors, insurers, and utilities can underwrite. None of that happens without real markets—and until now, those have been missing.
The UK’s move is not perfect, and it won’t be fast. But it’s a milestone: the first major economy to say, explicitly, that carbon removal belongs in the same market as pollution—and that removing carbon deserves the same financial seriousness as cutting it.
