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Jun 5, 2024

The US federal government releases Joint Policy Statement and Principles for the Voluntary Carbon Market

Blog

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Jun 5, 2024

The US federal government releases Joint Policy Statement and Principles for the Voluntary Carbon Market

Blog

/

Jun 5, 2024

The US federal government releases Joint Policy Statement and Principles for the Voluntary Carbon Market

The private sector has a critical role to play in limiting global warming. To achieve economy-wide decarbonization, scientific consensus says that today’s companies must put resources toward both deep emissions cuts and large-scale carbon removal. The voluntary carbon market has a critical role to play—as long as it can offer high-quality carbon removal solutions. 

Unfortunately, available carbon credits have been found to have inconsistent quality standards, ultimately disincentivizing private sector participation in the voluntary carbon markets. Last week the US federal government took critical steps to improve the quality of available credits when the White House announced the Voluntary Carbon Markets Joint Policy Statement and Principles. The principles outline standards for carbon credit developers and certifiers, which would help ensure that credits traded, sold, and claimed are consistent with science-based climate outcomes. In addition, the principles call for market frameworks to improve market and buyer integrity, which should reduce barriers to private sector participation in voluntary carbon markets.

Download: Criteria for High-Quality Carbon Dioxide Removal >

The importance of carbon removal quality and integrity

The voluntary carbon market is a way for companies to direct private capital toward carbon projects, including new and developing carbon removal technologies. High-quality standards ensure that credits sold deliver on carbon credit promises, which increases buyer confidence. 

The federal government’s principles reinforce the need for project developers and carbon credit certifiers to ensure that carbon credits are additional, verifiable, and durable, while also avoiding harm and ensuring community involvement and benefits from carbon projects. 

The principles also call for best practices to increase the integrity of the use of carbon credits as part of an overall net zero strategy. This includes providing frameworks by which organizations can use high-quality carbon credits against some harder-to-abate scope 3 emissions alongside broader decarbonization efforts. 

Although the federal government itself will presumably follow these principles as it interacts with the voluntary carbon market, the principles are not mandatory for private actors. Still, they are likely to significantly influence private sector action. Past government principles and standards, including the Federal Information Processing Standards (FIPS) and MIL-SPEC (military specification), have been widely adopted by the private sector to demonstrate best practices. And because this federal announcement was coordinated across several key agencies (Treasury, USDA, DOE, and State) its impact on the private market is likely to be even more significant.

Private Sector Impacts

With this announcement, the federal government has highlighted the valuable role that carbon credits play as part of a broader set of corporate climate actions and established a foundation for market integrity. But for buyers in the immediate future, assessing specific projects and making credible corporate claims still requires expertise and sustained attention. It’s a reminder that, even as we celebrate this milestone, there’s work left to do.

Report: The State of the Voluntary Carbon Market >

Tags

Climate Policy

Carbon Removal