Biden administration launches new policy guidelines for carbon credit buyers and sellers

The Biden administration announced today the release of “Voluntary Carbon Markets Joint Policy Statement and Principles,” aimed at strengthening and advancing market for carbon credits by setting out the U.S. government’s approach to ensuring the high integrity of voluntary carbon markets (VCMs).

The new policy statement comes as demand for carbon offset projects 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 difficulty to avoid emissions. In a further potential boost to the carbon credit market, for example, the SBTi recently announced that carbon credits will likely be permitted in net zero targets to help address Scope 3 emissions.

The unregulated and rapidly growing market faces a series of integrity-related challenges, however, with market participants unable to differentiate between high and low quality projects with insufficient or inconsistent data to assess the effectiveness of the projects.

To address these issues, the new document outlines a series of Principles for Responsible Participation in VCMs, which include ensuring that carbon credits and their underlying projects meet credible atmospheric integrity standards and represent real decarbonisation, that credit-generating activities avoid environmental and social harm, and support co-benefits and transparent and inclusive benefits-sharing, where applicable.

For companies buying and using carbon credits, the principles outline that corporate buyers should prioritise measurable emissions reductions within their own value chains, that users of credits should disclose the nature of purchased and retired credits, and that public claims by credit users should accurately reflect the climate impact of the retired credits, and only rely on credits that meet high integrity standards.

The principles also maintain that market participants should contribute to efforts that improve market integrity. Additionally, the principles state that policymakers and market participants should facilitate efficient market participation and seek to lower transaction costs.

The policy statement was co-signed by senior administration officials including Treasury Secretary Janet Yellen, Agriculture Secretary Tom Vilsack, Energy Secretary Jennifer Granholm, Senior Advisor for International Climate Policy John Podesta, National Economic Advisor Lael Brainard, and National Climate Advisor Ali Zaidi.

Source: Biden Administration Launches New Policy Guidelines for Carbon Credit Buyers and Sellers – ESG Today