The Biden-Harris Administration's new blueprint for high-integrity climate action.

On Tuesday, May 28th, in a landmark announcement, the Biden-Harris Administration unveiled new principles to revolutionize the Voluntary Carbon Market (VCM). These principles are set to redefine how carbon credits are generated, traded, and utilized, aligning with the broader ambition of America's climate agenda and reinforcing the use of carbon credits as an important pathway for decarbonization. Cross-departmental signatories representing the heads of the Treasury, Energy, and Agriculture departments, along with the administration’s top climate and economic advisors further highlights broad government support for widespread engagement and investment in climate solutions to meet global climate goals.?

The timing of this announcement comes as regulatory bodies and standards frameworks, including the Integrity Council for Voluntary Carbon Markets (ICVCM), continue to advance policies and principles to define high-quality offsets, signifying an alignment between government and private sector objectives for driving meaningful and substantial climate action. The principles also further complement the evolving stance of the Science Based Targets Initiative (SBTi) regarding the use of carbon credits for emissions abatement.?

Growing the high-integrity VCM can catalyze meaningful decarbonization by channeling consistent and reliable funding into projects that reduce or remove carbon emissions. These projects range from nature-based solutions like reforestation and wetland restoration to cutting-edge technologies such as direct air capture and carbon mineralization. However, for the VCM to realize its full potential, carbon credits must unequivocally represent real, additional, and verifiable emission reductions.

The Biden-Harris Administration’s commitment to developing a high-integrity VCM is captured in 7 principles:

1. Carbon credits and the activities that generate them should meet credible atmospheric integrity standards and represent real decarbonization.

1. Credit-generating activities should avoid environmental and social harm and should, where applicable, support co-benefits and transparent and inclusive benefits-sharing.

1. Corporate buyers that use credits (“credit users”) should prioritize measurable emissions reductions within their own value chains.?

1. Credit users should publicly disclose the nature of purchased and retired credits.?

1. Public claims by credit users should accurately reflect the climate impact of retired credits and should only rely on credits that meet high integrity standards.

1. Market participants should contribute to efforts that improve market integrity.

1. Policymakers and market participants should facilitate efficient market participation and seek to lower transaction costs.?

By creating a supportive regulatory environment and providing clear guidance, the administration aims to make the VCM more accessible to a diverse range of participants, including small-scale farmers, forest landowners, and innovative technology developers.

Additionally, by advocating for the inclusion of co-benefits and transparent benefits-sharing mechanisms, the principles ensure that credit-generating activities support economic development, sustain livelihoods, and conserve natural resources. This holistic approach not only enhances the credibility of the VCM but also aligns with broader global sustainability goals.

Invert Insights.

??By addressing the essential components of a high-integrity VCM, these principles emphasize that carbon credits should meet credible atmospheric integrity standards and result from activities that avoid environmental and social harm. In advocating for transparency in how credits are generated and used, they ensure that corporate buyers prioritize emissions reductions within their own operations before relying on carbon credits. This dual approach of internal reductions coupled with credible offsetting is crucial to enhancing the overall impact of the VCM.

??The release of these principles marks a significant step in the Biden-Harris Administration’s ongoing efforts to address climate change. By setting high standards for carbon credit quality and market integrity, the administration is fostering a robust framework that can channel significant financial resources into effective climate solutions. This leadership is crucial as the VCM becomes an increasingly important tool in the global fight against climate change.

??The principles outlined serve as a blueprint for developing high-quality, high-efficacy decarbonization actions. By ensuring that the VCM operates with the highest integrity, the Biden-Harris Administration is paving the way for a future where private capital can effectively complement public efforts in reducing greenhouse gas emissions and achieving net-zero goals.

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