US Unveils Policy to Enhance Integrity of Carbon Offset Market, Reports Reuters

By Valerie Volcovici

WASHINGTON – The U.S. government has introduced new regulations aimed at enhancing the credibility of voluntary carbon credits, responding to concerns over the effectiveness of certain offset projects that have not achieved their intended emissions reductions.

Key officials from the Treasury, Energy, and Agriculture Departments, alongside top climate and economic advisors to President Joe Biden, released a unified statement outlining the policy and principles designed to guide voluntary carbon market participation. This initiative is part of broader efforts to promote the growth of these markets.

"Voluntary carbon markets can help harness the potential of private sector initiatives to reduce emissions, but significant existing issues must be addressed first," stated Treasury Secretary Janet Yellen. She emphasized that the principles introduced are a vital step toward fostering voluntary carbon markets with high integrity.

Many companies attempt to compensate for their greenhouse gas emissions by purchasing voluntary carbon credits, which reflect avoided or removed emissions, primarily through projects in developing nations. However, a number of recent high-profile controversies have undermined confidence in the carbon offset market, leading some major companies to withdraw their participation. Studies have indicated that several large forest protection initiatives did not deliver the expected emission reductions, contributing to a decline in voluntary carbon market activity for the first time in at least seven years.

The principles for responsible participation in these markets, announced by U.S. officials, include rigorous standards to ensure that projects produce measurable and legitimate emissions reductions, continuous monitoring to protect local communities, and a requirement for corporate buyers to focus on decarbonizing their operations before purchasing credits.

"Credibility is literally the commodity," remarked Energy Secretary Jennifer Granholm at the press conference unveiling the new policy in Washington, D.C. She acknowledged the ongoing issues where voluntary carbon markets have not consistently fulfilled their promises.

This U.S. initiative aligns with the efforts of organizations such as the Integrity Council for Voluntary Carbon Markets, which has begun releasing principles aimed at defining high-quality carbon offsets. ICVCM Council Chair Annette Nazareth noted that the new U.S. principles correspond with its Core Carbon Principles, which are establishing the first independent global standard for reliable carbon credits.

"We are in a climate emergency and need all available tools to achieve the 1.5°C target," she emphasized. "High-integrity carbon credits can facilitate significant private investment into projects that reduce and remove billions of tons of emissions that might not otherwise be possible."

Marcene Mitchell, senior vice president of climate change at WWF, underscored the potential of carbon credits to attract considerable investment into diverse climate solutions, highlighting the need for evidence-based science and guidance to assist companies in transforming their operations and supply chains.

Last year, the Energy Department announced plans to purchase credits from projects aimed at removing carbon dioxide from the atmosphere, supporting the development of this technology. The Agriculture Department has also initiated a program to assist farmers, ranchers, and forest owners in engaging with carbon markets, focusing on identifying high-integrity carbon offset programs to generate credits. As part of this effort, the agency is actively seeking feedback on the program’s implementation.

Additionally, the State Department has established the Energy Transition Accelerator, a carbon offset initiative designed to facilitate the transition away from coal in developing nations, along with the LEAF coalition, which aims to combat tropical deforestation.