Policy & Regulation

Feds release new principles for voluntary carbon markets

Feds release new principles for voluntary carbon markets
(Photo by 金 运 on Unsplash)

The leaders of several federal offices announced the publication of a joint statement of policy and new principles for responsible participation in voluntary carbon markets (VCMs).

The joint statement was released by U.S. Secretary of the Treasury Janet Yellen, Department of Agriculture Secretary Tom Vilsack, Department of Energy Secretary Jennifer Granholm, Senior Advisor for International Climate Policy John Podesta, National Economic Advisor Lael Brainard, and National Climate Advisor Ali Zaidi.

“Voluntary carbon markets can help unlock the power of private markets to reduce emissions, but that can only happen if we address significant existing challenges,” said U.S. Secretary of the Treasury Janet L. Yellen. “The principles released today are an important step toward building high-integrity voluntary carbon markets. This is part of the Biden administration’s ambitious efforts to tackle the climate crisis and accelerate a clean energy transition that benefits all Americans.”

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VCMs are markets in which carbon credits — each representing one ton of carbon reduced or removed from the atmosphere — are bought and sold by companies, NGOs, governments, and others on a voluntary basis. However, challenges in these markets, such as projects that don’t deliver the positive climate impact they promised, have undermined confidence in VCMs, the Department of Energy said. Stakeholders are not currently fully certain that one credit truly represents one ton of carbon dioxide (or its equivalent) reduced or removed from the atmosphere, beyond what would have otherwise occurred.

The statement and principles are meant to affirm that high-integrity VCMs can play a meaningful role in reducing and removing global greenhouse gas emissions. VCMs can deliver additional capital and market support for both existing, credible decarbonization practices, including nature-based solutions, and for climate technologies, including those that scale up carbon removal activities, the Department of Energy said.

The announcement also highlighted the initiatives being pursued across the Biden-Harris Administration to encourage the development of VCMs including: direct carbon removal purchases by the Department of Energy; the buildout of market infrastructure and support by the Department of Agriculture; the Department of State’s negotiating international climate agreements and in supporting crediting initiatives, such as the LEAF Coalition and Energy Transition Accelerator; and the Department of the Treasury’s release of principles to support private sector net-zero transition planning.

The announcement also includes new actions to strengthen these markets. These include the release of a Request for Information by the Department of Agriculture asking for public input relating to the protocols used in VCMs, furthering its work to implement the Growing Climate Solutions Act, and the announcement by the Department of Energy of the semifinalists for its $35 million Carbon Dioxide Removal Purchase Pilot Prize.

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