In the red, to go green - high-quality carbon removals matter

For decades, companies have sought to balance their carbon footprints through offsets - often relying on voluntary carbon markets (VCMs) to neutralise their emissions. But, as scrutiny increases and regulations tighten, many are realising that traditional offsetting isn’t enough.

Now, the conversation is shifting from mere carbon neutrality to carbon negativity, where businesses don’t just offset but actively remove emissions from the atmosphere. This shift brings financial and reputational opportunities, particularly for those willing to invest in high-quality carbon removals. In short, being "in the red" can be the smartest way to go green.

COP29, carbon markets and the UK’s regulatory shift

COP29 has placed a renewed focus on carbon markets, with ongoing discussions about strengthening Article 6 of the Paris Agreement and tightening standards for voluntary and compliance carbon trading. The UK is also reassessing its approach as the government considers reforms to its own Emissions Trading Scheme (UK ETS) to ensure alignment with net zero targets.

But there’s a critical urgency: if the UK does not establish itself as the global leader in high-integrity greenhouse gas removals (GGR) within VCM, it risks losing ground to international competitors. The window to anchor a robust, high-quality GGR market in the UK is narrowing. Other regions, from the US to the EU, are advancing their own frameworks and without decisive action, capital and innovation will flow elsewhere.

The takeaway? Companies that invest in robust carbon removals now will be better positioned to comply with incoming regulations and market shifts. As rules around offset credibility tighten, high-quality removals will become not just desirable, but essential.

Understanding carbon credits and their evolution

A carbon credit is a tradable permit or certificate that represents the reduction, avoidance, or removal of one metric ton of carbon dioxide (CO₂) or its equivalent in other greenhouse gases from the atmosphere. It serves as a mechanism to incentivise and finance projects aimed at reducing greenhouse gas emissions globally.

Traditionally, offsetting has relied on projects that prevent emissions - such as forest conservation or renewable energy initiatives. While these efforts are valuable, they do not remove existing carbon from the atmosphere, a crucial distinction as we race to meet net zero and net negative targets.

In contrast, carbon removals actively extract CO2 from the air or industrial processes, providing a more durable climate impact. Among the most promising solutions is bioenergy with carbon capture and storage (BECCS), which not only generates renewable energy but also captures and securely stores emissions underground. These high-integrity removals are gaining traction among forward-thinking companies seeking long-term, verifiable climate solutions.

The financial case for carbon negativity

Many businesses still view carbon credits as a cost - a necessary but non-strategic expense. However, as the market evolves, this perspective is outdated. There is a growing appetite for verifiable, high-impact carbon removals, with early movers securing high-value credits before regulatory shifts make them a necessity rather than a choice.

Why? Because regulators and investors alike are demanding higher standards. Companies relying on lower-integrity offsets may find themselves exposed to reputational and compliance risks, while those investing in premium removals can future-proof their sustainability strategies.

The demand for carbon removals is already outpacing supply, making them a smart financial asset rather than just an environmental obligation. The UK’s industrial decarbonisation strategy highlights the role of engineered carbon removals like BECCS, positioning them as a critical tool for reaching national net zero targets. Companies securing BECCS-based credits today are not only ensuring compliance with emerging regulations but also demonstrating climate leadership.

Negative is the new positive

The old way of offsetting - buying credits to compensate for emissions without deeper scrutiny - is becoming obsolete. The future belongs to companies that take carbon removal seriously, investing in solutions that deliver long-term impact.

Investing in high-quality removals isn’t a liability - it’s an opportunity. The UK must act now to maintain its competitive edge and establish itself as the premier hub for high-value carbon removals. Those who recognise this now will be the ones to benefit as carbon markets evolve, regulations tighten and climate-conscious stakeholders demand more than just neutrality.

In carbon markets, as in finance, thinking ahead pays off. The time to act is now.