Carbon credits for UK businesses: what they are, and why solar is the better first step

The short answer

• A carbon credit stands for one tonne of carbon dioxide equivalent (CO2e) cut or removed by a project somewhere else, checked under a standard and recorded on a registry. Buying credits and using them to compensate for your own emissions is called carbon offsetting.
• Most UK businesses are not in the compliance market. The UK Emissions Trading Scheme covers power generation, energy-intensive industry, aviation and, since 1 July 2026, domestic shipping. Everyone else who buys credits does so voluntarily.
• Rooftop solar on a UK business does not earn sellable carbon credits. No UK government-backed code covers it, and the two largest international standards, Verra and Gold Standard, exclude grid-connected solar in high-income countries such as the UK.
• What solar does is cut your own emissions at source. On an illustrative 100 kWp system, the electricity you no longer buy is about 9.4 tonnes CO2e a year at the 2026 government factor, and it saves money rather than costing it.
• Reduce first, then offset what is left. UK government principles and the Woodland Carbon Code both say credits should come after real action to cut your own emissions, not instead of it.

Note: This guide is general information, not reporting, legal or investment advice. Prices, rules and standards change. Confirm your approach with whoever prepares your emissions figures.

What carbon credits are

A carbon credit is a certificate for one tonne of CO2e that a project has kept out of the atmosphere (a reduction, such as replacing a polluting process) or taken out of it (a removal, such as trees growing). An independent body checks the project against a standard, and the credit is issued on a registry. When a business uses a credit to compensate for its own emissions, the credit is retired so nobody can use it again.

The GHG Protocol, the framework most UK emissions reporting follows, describes offsets as "discrete GHG reductions used to compensate for (i.e., offset) GHG emissions elsewhere" (GHG Protocol Corporate Standard). In everyday use, "carbon credit" and "carbon offset" mean much the same thing: the credit is what you buy, offsetting is what you do with it.

Two points matter for anyone thinking of buying them:

• Credits do not change your own emissions figure. Under the GHG Protocol you report your scope 1, 2 and 3 emissions in full, and any offsets you have bought are shown separately, not subtracted.
• Quality varies. A credit is only as good as the project and the standard behind it: whether the cut would have happened anyway, whether it lasts, and whether it was counted correctly.

Compliance and voluntary markets

The UK Emissions Trading Scheme

The UK ETS started on 1 January 2021 and works on cap and trade: a cap is set on the emissions of the sectors it covers, operators must surrender allowances each year to cover their emissions, and the cap falls over time (GOV.UK: participating in the UK ETS, updated 1 July 2026). It covers:

• installations in energy-intensive industry and power generation, where combustion units have a total rated thermal input above 20 MW,
• aviation: UK domestic flights, flights between the UK and Gibraltar, and flights from the UK to the EEA and Switzerland,
• shipping: domestic voyages and in-port activity by ships of 5,000 gross tonnage and above, since 1 July 2026.

An office, warehouse, farm, school or small factory looking at rooftop solar is very unlikely to be in it. If your business is not in the UK ETS, any credits you buy are voluntary.

UK carbon credits: woodland and peatland

The UK has two government-backed voluntary standards for carbon credits, and both are for land:

• The Woodland Carbon Code, for new woodland, is delivered by Scottish Forestry on behalf of the governments of the UK, Scotland, Wales and Northern Ireland (Woodland Carbon Code).
• The Peatland Code, for peatland restoration, is developed and managed by the IUCN UK Peatland Programme and verified to an accredited standard (IUCN UK Peatland Programme).

Both sell two kinds of unit. A Pending Issuance Unit is a promise of a future verified unit, based on predicted carbon removal. The Woodland Carbon Code says it is not guaranteed, "so can't be used to report against UK-based emissions"; it helps a business plan for compensating future emissions. A Woodland Carbon Unit is a verified, guaranteed tonne of CO2e already removed, which companies can use to report against UK-based emissions. In April 2025 only about 800 Woodland Carbon Units were available (Woodland Carbon Code: what you can buy).

Units from these codes cannot be used for overseas emissions or international aviation and shipping, and Woodland Carbon Units cannot currently be used in compliance schemes such as the UK ETS (how to buy and use units). Credits are traded and retired on the UK Land Carbon Registry.

None of the UK's government-backed codes covers rooftop solar, or renewable electricity of any kind.

What carbon credits cost

There is no single carbon credit price. Prices depend on the standard, the type of project, where it is, its vintage and the size of the deal, and most voluntary sales are private.

Reported UK unit prices for 2025, from the Woodland Carbon Code (read 6 November 2026)

Source: Woodland Carbon Code: UK carbon prices, using sales data reported voluntarily to Ecosystem Marketplace. Each unit is one tonne of CO2e. The Peatland Code says its 2025 average rests on a small sample and was pushed up by three large transactions, and neither code has enough sales yet to publish a price for verified units. The same page puts the global voluntary market average at $6.37 a tonne in 2024, well below UK woodland prices.

Important: Prices vary from deal to deal and year to year. Treat these as published averages for one year, not a quote.

Can your own solar panels earn carbon credits?

For a UK business with panels on its roof, the honest answer is no.

• No UK code covers it. The government-backed codes are for woodland and peatland only.
• Verra excludes it. Verra's methodology for grid-connected renewable electricity, VMR0017 (active since 23 April 2026), allows terrestrial solar PV only in low, lower middle and upper middle income countries, using the World Bank's income groups (Verra: VMR0017). The UK is a high-income country.
• Gold Standard excludes it. Its renewable energy rules say grid-connected renewable projects are ineligible for its credits if located in an upper middle or high-income country (Gold Standard renewable energy activity requirements, version 1.4, August 2021).

The reasoning behind these rules is additionality: a credit should pay for a cut that would not otherwise happen. In a country like the UK, commercial solar usually pays for itself through lower bills, so it does not need carbon finance to go ahead, and the standards focus renewable energy credits on poorer countries where it can make the difference.

Be wary of anyone offering to buy "carbon credits" from your rooftop system. What a renewable generator can sometimes sell in the UK is a Renewable Energy Guarantee of Origin (REGO), an Ofgem certificate showing electricity came from a renewable source. A REGO is not a carbon credit, and if you sell it you give up the right to claim that electricity as renewable. Our carbon reporting guide explains REGOs in more detail.

What solar does instead: it cuts your own emissions

Electricity you buy from the grid is reported as scope 2 emissions. Every kWh your panels produce and your site uses is a kWh you never buy, so your scope 2 figure falls under both the location-based and market-based methods in the GHG Protocol scope 2 guidance. Unlike a credit, that is a real reduction in your own figures, and it repeats every year the panels run.

The government publishes the factor used to turn electricity into emissions each year. For 2026 the UK electricity factor is 0.13096 kgCO2e per kWh, 26% lower than in 2025, mostly because the grid has decarbonised (GOV.UK: greenhouse gas reporting conversion factors 2026, published 11 June 2026).

An illustrative example

Take the illustrative system used across our guides: a 100 kWp rooftop array generating about 90,000 kWh a year, with 80% (72,000 kWh) used on site and 20% exported.

The exported 18,000 kWh is not deducted from your emissions; it can be noted separately. These are illustrative figures with stated assumptions, not a forecast. Your own roof, meter data and unit rate give the real ones, and the tonnes will move each year as the government factor changes, so report the kWh you bought alongside the tonnes. See how much solar your business needs for how the generation estimate is made and solar payback for the money side.

The contrast with credits is the point. Credits are a cost every year and leave your own figures unchanged. Solar is an investment that cuts the electricity you buy, lowers your reported emissions and pays back.

Offsetting vs reducing

UK government principles for voluntary carbon markets say "Credits should only be used in addition to ambitious action within value chains", and that businesses should first minimise their own impacts (GOV.UK: voluntary carbon and nature markets, raising integrity). The Woodland Carbon Code sets out the same order: measure your footprint, set targets, and act to cut scope 1, 2 and where possible scope 3 emissions before buying credits.

For most businesses a sensible sequence is:

1. Measure: work out your scope 1 and 2 emissions from bills and meter data.
2. Cut waste: lighting, controls, heating, compressed air and process efficiency. See cutting business energy costs.
3. Generate your own: rooftop or ground-mounted solar sized to your daytime use, with battery storage where it helps.
4. Buy the rest renewable: a green tariff or a PPA for electricity solar cannot cover. See renewable energy for business.
5. Offset what remains: credits for the residual emissions you cannot yet cut.

When buying credits still makes sense

Credits are not wrong; they just come last. They can make sense:

• for residual emissions you cannot yet cut, such as some fleet fuel, process emissions or business travel,
• when you have a net zero target and need to compensate for what remains after real reductions,
• to support a specific project you care about, such as new woodland near your site, as a contribution rather than a claim about your own figures.

If you do buy, choose verified units where you want to report against UK emissions, keep the retirement records, show offsets separately from your emissions in any report, and be careful what you claim. The Competition and Markets Authority's Green Claims Code expects environmental claims to be truthful, clear and backed by evidence, which rules out vague phrases such as "carbon neutral" without the detail behind them.

Reporting: SECR, scope 2 and procurement

If your company reports under Streamlined Energy and Carbon Reporting (SECR), bids for major public contracts with a carbon reduction plan or answers customer supplier questionnaires, solar shows up as lower purchased electricity in your scope 2 figures. Our guide to solar and carbon reporting covers SECR, location-based and market-based scope 2, REGOs and what to avoid claiming, and ESOS covers the energy audit large organisations must carry out.

Find out what solar could cut on your site

The first step is a survey. We match your business with one MCS certified installer for a free commercial solar site survey, and the survey sets out the expected generation and self-consumption in kWh, which turns straight into a scope 2 figure for your reporting. We don't survey or install ourselves. Request a free survey to find out what your roof could do.

Sources

All pages read on 6 November 2026.

• GOV.UK: participating in the UK ETS (updated 1 July 2026)
• GOV.UK: greenhouse gas reporting conversion factors 2026 (published 11 June 2026), full set and major changes report
• Woodland Carbon Code, what you can buy, how to buy and use units and UK carbon prices
• IUCN UK Peatland Programme: the Peatland Code
• Verra: VMR0017, grid-connected electricity generation from renewable sources, v1.0 (active 23 April 2026)
• Gold Standard: renewable energy activity requirements, version 1.4 (16 August 2021)
• GHG Protocol: Corporate Standard and Scope 2 Guidance
• GOV.UK: voluntary carbon and nature markets, raising integrity (consultation outcome, updated 26 March 2026)
• CMA: Green Claims Code