US Government Introduces New Integrity Principles for Voluntary Carbon Markets

The US government has introduced a new set of principles aimed at enhancing the integrity of voluntary carbon markets (VCMs) and fostering investment in domestic and international decarbonization projects. This announcement from the White House, titled "New Principles For Responsible Participation In Voluntary Carbon Markets," seeks to address long-standing concerns and bolster confidence in VCMs, which have faced scrutiny over the credibility and impact of carbon credits.

Key Principles for VCMs

The White House outlined seven main principles for responsible VCM participation:

1. Credible Atmospheric Integrity Standards: Carbon credits must meet high standards and represent genuine decarbonization efforts.
2. Avoiding Environmental and Social Harm: Activities generating credits should not harm the environment or communities and should support co-benefits where possible.
3. Prioritizing Emissions Reductions: Corporate buyers should focus on measurable emissions reductions within their own value chains.
4. Public Disclosure: Credit users should transparently disclose the nature of their purchased and retired credits.
5. Accurate Public Claims: Claims about the climate impact of credits should be accurate and rely on high-integrity credits.
6. Improving Market Integrity: Market participants should work towards enhancing overall market integrity.
7. Efficient Market Participation: Policymakers and participants should aim to reduce transaction costs and facilitate market participation.

These principles are designed to ensure that each carbon offset is equivalent to one tonne of carbon dioxide equivalent (CO2e) reduced, addressing issues that have undermined market confidence and credit prices.

High-Level Endorsement and Policy Backing

The principles were endorsed by several key US policymakers, including Treasury Secretary Janet Yellen, Agriculture Secretary Tom Vilsack, Energy Secretary Jennifer Granholm, and Senior Climate Advisor John Podesta. This high-level backing underscores the administration's commitment to strengthening the VCM framework and aligning various integrity efforts.

Context and Impact

This announcement follows increased regulatory scrutiny and efforts to enhance VCM integrity, reflecting a broader trend among US corporations to disclose more about their carbon offset use. The Biden administration's move is seen as a response to negative media coverage and market uncertainty that have plagued the VCM since early 2023 .

The principles aim to restore market confidence and ensure that VCMs fulfill their potential in driving climate action and delivering verifiable decarbonization. By promoting transparency, accountability, and high standards, the administration hopes to unlock significant financial resources for climate projects.

Future Directions

The announcement also highlights the evolving landscape of carbon standards in the US. For instance, Verra, a leading carbon standard, is revising methodologies to align with the Corsia aviation decarbonization scheme, which requires airlines to purchase UN-approved offsets.

Additionally, the Science Based Targets initiative (SBTi) is expected to update its policy on allowing offsets for scope 3 emissions, a contentious issue among corporate and climate stakeholders. The USDA is also seeking public input on protocols to facilitate the participation of farmers, ranchers, and private forest landowners in VCMs.

Overall, these developments signal a concerted effort to enhance the credibility and effectiveness of VCMs, ensuring they contribute meaningfully to global decarbonization goals while supporting economic and social co-benefits.