Britain eyes London as global carbon offset market hub

FILE PHOTO: Buildings are seen in the Canary Wharf business district, amid the outbreak of the coronavirus disease (COVID-19), in London, Britain January 27, 2021. REUTERS/Peter Cziborra

LONDON (Reuters) - Britain is taking steps to establish London as a global hub for the trade of voluntary carbon offsets, finance minister Rishi Sunak said on Wednesday.

The market for carbon offsets is expected to soar over the next few years as companies seek to buy carbon credits to help meet their climate targets and compensate for emissions they are unable to cut themselves.

A new group will be established, led by former London Stock Exchange Group chief executive Clara Furse, “with the aim of positioning the UK and the City of London as the leader of the global voluntary carbon markets,” Sunak said when unveiling the country’s budget.

Britain’s carbon tax will continue to be frozen at 18 pounds ($25.12) per tonne until April 2023, budget documents showed on Wednesday.

Britain introduced the tax on emissions from power plants in April 2013 as a part of efforts to reduce emissions and meet its climate targets, by making polluting fossil fuel power production more expensive.

Britain also launched a domestic emissions trading system (ETS) this year as part of the country’s plan to reach a net zero carbon emissions target by 2050.

The scheme, which charges emitters such as power plants and industrial factories for each tonne of carbon dioxide, replaces Britain’s participation in the European Union’s ETS, which it left at the end of 2020.

“The government is committed to carbon pricing as a tool to drive decarbonisation and intends to set out additional proposals for expanding the UK Emissions Trading Scheme over the course of 2021,” budget documents said.

($1 = 0.7165 pounds)

Reporting by Susanna Twidale, editing by Louise Heavens, Kirsten Donovan