Biden Administration Unveils Guidelines to Strengthen Voluntary Carbon Markets

The Biden administration has unveiled the “Voluntary Carbon Markets Joint Policy Statement and Principles” to bolster the carbon credit market by establishing US government guidelines for ensuring the integrity of voluntary carbon markets (VCMs). This initiative comes as demand for carbon offset projects and related credits is poised to rise, driven by companies striving for net-zero goals and utilizing offsets to complement emission reduction efforts or offset unavoidable emissions. Notably, the Science Based Targets initiative (SBTi) recently suggested that carbon credits may be permissible in net-zero targets to address Scope 3 emissions.

Despite market growth, integrity challenges persist, with participants grappling to discern between high and low-quality projects due to inadequate or inconsistent data on project effectiveness.

US Treasury Secretary Janet Yellen, in announcing the new guidelines for carbon credits, emphasized, “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. 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.”