Biden Administration Issues Voluntary Guidelines for Carbon Credits

The United States government has issued guidelines that encourage participants in the emission offset market to ensure accuracy, transparency and traceability.

The Voluntary Carbon Markets (VCMs) Joint Policy Statement and Principles by relevant federal agencies affirms the role of carbon credits in the realization of climate goals but notes that it should not be taken as a substitute for activity-level emission reduction.

“Widespread confidence in the integrity of credited emissions reductions and removals is critical for VCMs to reach their potential”, said the statement of policy and principles, crafted by the energy, agriculture and treasury departments and presidential climate and economic advisers.

“However, researchers, journalists, and other observers have found that several popular crediting methodologies and activities that rely on them have not produced the decarbonization outcomes they claim”, it added.

“Important questions have emerged about how to ensure that VCMs genuinely drive additional decarbonization action (rather than reward what would have happened anyway) that is sustained over time and does not simply shift emissions elsewhere.

“In addition, barriers to market participation have inhibited market efficiency and opportunity”.

The first principle states that a carbon credit must represent actual decarbonization and that the offset emissions must be kept out of the atmosphere for a specified time. Leakage within this period should be “fully remediated”.

“One credit corresponds to only one tonne of carbon dioxide (or its equivalent) reduced or removed from the atmosphere and is not double-issued”, the statement said.

Carbon credit certification bodies should have registries that transparently track the “attributes, issuance, ownership, and retirement and/or cancellation of credits, coordinating where appropriate to ensure that activities are not registered with more than one registry”. The bodies should have mechanisms to prevent buyers from registering credits more than once.

The second principle calls for respect to the environment and human rights. “Safeguards should be put in place to identify and avoid potential adverse impacts on people and the environment, including as they relate to local communities, land use and tenure rights, food security, nature, and biodiversity”, the statement said.

The third principle tells corporate buyers to prioritize “measurable emissions reductions within their own value chains”.

Fourthly, credit users should disclose at least annually “the nature of purchased and retired credits” to enable the public to verify that the credits have real offsets and the activity that generated the credits avoided negative impacts on people and the environment.

The fifth principle encourages “incentives to purchase high-integrity credits on an ongoing, regular basis without reducing incentives for companies to expeditiously pursue within-value-chain emissions reductions”.

The sixth principle calls for mechanisms that allow market participants to take part in improving the integrity of the market.

The seventh principle urges cooperation between policymakers and market participants to lower transaction costs.

"If done right, Voluntary Carbon Markets can provide new revenue opportunities for farmers, ranchers, private forest landowners and the rural communities they live in, all while driving needed investment in nature-based climate solutions across the agriculture and forestry sectors”, Agriculture Secretary Tom Vilsack said in a statement.

John Podesta, senior advisor to President Joe Biden for international climate policy, said, “Voluntary carbon markets that adhere to principles of high integrity can play a critical role in getting private capital off the sidelines, accelerate our progress on climate, protect nature, and support clean energy deployment in developing countries that can benefit most from new investment”.

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