The London Stock Exchange (LSE) announced plans to develop a market solution for voluntary carbon markets, aiming to enhance investment in carbon mitigation projects worldwide, providing capital for projects that reduce greenhouse gas emissions and remove carbon from the atmosphere.

Demand for carbon offset projects that counteract the release of greenhouse gases, and related credits, is expected to increase significantly over the next several years, as companies and businesses increasingly launch net zero ambitions, and turn to offsets as a bridge to their own absolute emissions reduction efforts, or to balance difficult to avoid emissions.

With the planned market launch, the LSE aims to address the major barriers that threaten to restrict the development of the voluntary carbon markets, including the need for access to capital at scale for the development of new climate projects worldwide, and for primary market access to a long-term supply of high-quality carbon credits for corporates and investors.

According to the LSE, the new solution will be created utilizing the exchange’s existing market infrastructure, supplemented by specific requirements relevant to carbon credit projects.

The LSE market will form part of an emerging marketplace of solutions aiming to improve the transparency and liquidity of carbon markets. Last week, exchange and clearing house operator Intercontinental Exchange (ICE) announced plans to launch its first Nature-Based Solutions (NBS) carbon credit futures contract, in order to help market participants to value natural assets in the agriculture, forestry and other land use sectors.

Julia Hoggett, CEO of the London Stock Exchange, said:

“Climate change is the most urgent challenge of our lifetimes. It is essential that the global capital markets, long the drivers of economic activity, are reoriented to act in service of the planet. By creating solutions to direct capital flows into projects that address the climate crisis, many in the Global South, the London Stock Exchange can play its part in supporting a just transition to a low carbon economy.”

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