Biden-Harris Administration Unveils New Principles for High-Integrity Voluntary Carbon Markets

SAN JOSE - In a significant step toward addressing climate change, the Biden-Harris Administration has announced new principles designed to enhance the integrity and effectiveness of Voluntary Carbon Markets (VCMs). This initiative is a part of President Biden's broader climate agenda, which has already achieved notable milestones, such as the Inflation Reduction Act—the largest climate investment in U.S. history—and other legislative efforts aimed at reducing greenhouse gas emissions across various sectors of the economy.

A Historic Climate Agenda

Since the onset of his presidency, Joe Biden has prioritized climate action. This commitment is reflected in the administration's successful mobilization of over $860 billion in business investments through the Inflation Reduction Act, the Bipartisan Infrastructure Law, and the CHIPS and Science Act. These investments have not only fostered the creation of numerous American jobs in clean energy and manufacturing but have also revitalized communities that have long been neglected.

President Biden's climate goals are ambitious: to cut greenhouse gas emissions in half by 2030 and to achieve net zero emissions by 2050. To meet these targets, the administration emphasizes the importance of driving investments across diverse business landscapes, including rural farms, cutting-edge technology companies, and historically underserved entrepreneurs.

The Role of Voluntary Carbon Markets

VCMs are a critical component of this strategy. These markets allow businesses and individuals to purchase carbon credits, representing reductions in greenhouse gas emissions. By mobilizing private capital to fund projects that reduce or remove carbon emissions, VCMs complement broader regulatory and legislative measures aimed at combating climate change.

However, VCMs have faced criticism for inconsistencies in crediting methodologies and the reliability of claimed decarbonization outcomes. To address these issues, the Biden-Harris Administration has introduced a Joint Statement of Policy and new Principles for Responsible Participation in VCMs. This policy, endorsed by high-ranking officials including Treasury Secretary Janet Yellen and Energy Secretary Jennifer Granholm, aims to establish robust standards and incentives to ensure that VCMs fulfill their potential.

Principles for High-Integrity VCMs

The newly released principles outline several key requirements for carbon credits and the activities that generate them:

1. Credible Atmospheric Integrity: Carbon credits must meet rigorous standards to ensure they represent real and verifiable decarbonization.
2. Avoiding Environmental and Social Harm: Credit-generating activities should avoid causing environmental or social damage and should support co-benefits, such as transparent and inclusive benefits-sharing.
3. Prioritizing Emissions Reductions: Corporate buyers should focus on measurable emissions reductions within their value chains before relying on carbon credits.
4. Transparency and Accountability: Credit users must publicly disclose the nature of their purchased and retired credits to ensure claims accurately reflect the climate impact.
5. Market Integrity: Participants should contribute to efforts that enhance market integrity and facilitate efficient participation with lower transaction costs.

Implications for Climate Action

The Biden-Harris Administration's approach to VCMs is designed to restore confidence in these markets by addressing existing challenges and establishing high standards for both credit supply and demand. This initiative is expected to attract significant private capital to support a wide range of decarbonization projects, including nature-based solutions and innovative climate technologies.

High-integrity VCMs can provide reliable revenue streams to projects that reduce or remove carbon emissions, thereby accelerating decarbonization efforts. These markets can also deliver important co-benefits, such as economic development, support for Tribal Nations and Indigenous Peoples, and conservation of natural resources.

Enhancing Market Functioning and Integrity

To ensure that VCMs can deliver on their promise, the administration is taking several steps to enhance market functioning and integrity:

1. Establishing Robust Standards: The administration is setting standards for carbon credit supply and demand to ensure that credits represent real and lasting emissions reductions.
2. Improving Market Transparency: By requiring public disclosure of credit purchases and retirements, the administration aims to increase transparency and accountability in the market.
3. Supporting Fair Participation: Efforts are being made to lower barriers to market participation, ensuring that all stakeholders, including small businesses and underserved communities, can benefit from VCMs.
4. Advancing Environmental Justice: The administration is committed to ensuring that the benefits of VCMs are distributed fairly and that activities avoid causing environmental and social harm.

Ongoing and Future Efforts

The principles for high-integrity VCMs build on ongoing efforts across the Biden-Harris Administration to support the development of these markets. Key initiatives include:

• Supporting Farmers and Forest Landowners: The USDA is implementing the Greenhouse Gas Technical Assistance Provider and Third-Party Verifier Program to help farmers, ranchers, and private forest landowners participate in VCMs.
• Encouraging Innovation in Carbon Removal: The Department of Energy (DOE) is investing in carbon removal technologies through programs such as the Carbon Dioxide Removal Purchase Pilot Prize and the Carbon Negative Shot pilot program.
• Leading International Standards: U.S. agencies are participating in international standard-setting efforts to promote high-quality carbon credits and support global climate goals.
• Providing Technical and Financial Assistance: The U.S. government is offering financial aid and technical support to credit-generating projects in developing countries to ensure high standards of transparency and integrity.

The Biden-Harris Administration's new principles for high-integrity Voluntary Carbon Markets represent a significant step forward in the fight against climate change. By establishing robust standards and promoting transparency and accountability, the administration aims to restore confidence in VCMs and attract the private capital needed to support innovative decarbonization projects.

These efforts underscore the administration's commitment to achieving its ambitious climate goals and restoring America's leadership in global climate action. High-integrity VCMs have the potential to drive significant progress toward these goals by providing reliable funding for projects that reduce or remove carbon emissions and deliver important co-benefits for communities and ecosystems.

As the administration continues to implement these principles and support the development of high-integrity VCMs, stakeholders can be confident that their participation in these markets will contribute to meaningful and verifiable climate action. This initiative is a crucial component of President Biden's broader climate agenda, which seeks to create economic opportunities, support environmental justice, and ensure a sustainable future for all (The White House).