Takeaways

• The UK is laying the groundwork for a negative emissions market by integrating engineered greenhouse gas removals (GGRs) into the UK Emissions Trading Scheme.
• A new Contracts for Difference-style business model aims to provide revenue certainty and attract private investment into GGR projects.
• Together, these policies are designed to scale up high-integrity carbon removals needed to meet the UK’s net-zero targets.

Engineered greenhouse gas removals (GGRs) are technologies designed to remove carbon dioxide directly from the atmosphere and store it permanently. While widely seen as essential for achieving net zero, especially for emissions that are hard to eliminate, most GGR technologies are still at an early commercial stage. As a result, government support is viewed as critical to help build viable markets and unlock investment.

In recent months, the UK government has taken several important steps to support the development of negative emissions markets. These include plans to integrate GGRs into the UK Emissions Trading Scheme (UK ETS) and the launch of a new GGR Business Model (GGR BM) that offers revenue support through a Contracts for Difference (CfD)-style mechanism.

Why GGR policy matters

The government sees GGRs as a key tool for meeting the UK’s net-zero goals. Even with aggressive decarbonization, some residual emissions will remain. High-integrity removals are expected to play a growing role in offsetting these emissions. By embedding GGRs into both voluntary and compliance markets, policymakers aim to create demand, provide price signals, and encourage long-term private investment.

Read More: Understanding Carbon Accounting: A Practical Guide for 2025

Integrating GGRs into the UK ETS

Earlier this year, the government published its response to a consultation on integrating GGRs into the UK ETS. The approach is deliberately cautious, reflecting concerns about market stability and environmental integrity.

One key decision is that the overall ETS cap will not change. Instead, emissions allowances will gradually be replaced one-for-one with GGR allowances. This is intended to preserve incentives for emissions reductions while allowing removals to enter the system.

Only “highly permanent” removals, with a minimum storage period of 200 years, will qualify. Projects will also be required to meet strict monitoring, reporting, and verification rules aligned with standards being developed by the British Standards Institution. Integration is expected to be operational by the end of 2029, with legislation targeted for 2028.

The GGR Business Model

Alongside ETS reform, the government has released the first draft of its GGR Business Model. This model mirrors the CfD approach used in renewable energy, offering developers a guaranteed “strike price” per tonne of CO₂ removed.

Under the model, one tonne of CO₂ removed generates one GGR credit. If the market price for that credit is below the strike price, the government provides a top-up. If it is higher, the developer pays back the difference. To encourage genuine price discovery, projects can also earn a small incentive for achieving higher sales prices.

Credits must comply with a forthcoming GGR Standard and can be sold in voluntary carbon markets or compliance schemes such as the UK ETS. The standard is expected to draw on best-practice frameworks, including those developed by the Integrity Council for the Voluntary Carbon Market.

What Comes Next

The UK’s GGR framework is still evolving. An independent review published in October called for faster deployment and stronger coordination across government. Internationally, initiatives such as the Coalition to Grow Carbon Markets, launched during London Climate Action Week, highlight growing global interest in high-integrity carbon credits.

Also Read: What Is Carbon Capture & Storage? Technology, Benefits & Risks

For developers and market participants, the message is clear: The UK is serious about building a functioning negative emissions market, but navigating the rules will require close attention as policies continue to develop.

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Source: DENTONS