Today, U.S. Secretary of the Treasury Janet Yellen, Department of Agriculture Secretary Tom Vilsack, Department of Energy Secretary Jennifer Granholm, Senior Advisor for International Climate Policy John Podesta, National Economic Advisor Lael Brainard, and National Climate Advisor Ali Zaidi announced the publication of a Joint Statement of Policy and new Principles for Responsible Participation in Voluntary Carbon Markets (VCMs), which have the potential to play an important role in channeling private capital to drive decarbonization efforts. Since Day One, President Biden has led and delivered on the most ambitious climate agenda in history, including securing the Inflation Reduction Act, the country’s largest-ever investment in climate, and taking executive action to cut emissions across every sector of the economy. The Biden-Harris Administration is committed to tackling the climate crisis using all tools at our disposal and ensuring that the economic opportunities created by a clean energy future are shared across the country and available to all Americans.
“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,” said U.S. Secretary of the Treasury Janet L. Yellen. “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.”
VCMs are markets in which carbon credits—each representing one tonne of carbon reduced or removed from the atmosphere—are bought and sold by companies, NGOs, governments, and others on a voluntary basis. In addition to their potential to drive decarbonization efforts, VCMs also have the potential to generate economic opportunity at home and abroad—including for farmers, ranchers, small suppliers, and through projects and programs in developing countries. VCMs can serve as an important source of revenue, enabling finance that advances decarbonization and provides critical economic support to many who need it.
However, challenges in these markets, such as projects that don’t deliver the positive climate impact they promised, have undermined confidence in VCMs. These markets have the potential to create economic opportunity and can be a a useful tool in tackling climate change, but only if further action is taken to address these challenges. Critically, stakeholders must be certain that one credit truly represents one tonne of carbon dioxide (or its equivalent) reduced or removed from the atmosphere, beyond what would have otherwise occurred. Further action is also needed to address challenges regarding the credible use of credits and market integrity.
The Statement and Principles released today represent the Biden-Harris Administration’s commitment to advance responsible market practices that will help VCMs drive meaningful climate ambition and generate economic opportunity at home and abroad.
“To reach net-zero emissions by mid-century and achieve our climate goals, we need to mobilize enormous amounts of private capital,” said John Podesta, Senior Advisor to the President for International Climate Policy. “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.”
“With the right incentives and guardrails in place, VCMs can be a source of critical financing to drive decarbonization and clean energy solutions,” said Lael Brainard, National Economic Advisor.
“When President Biden thinks climate, he thinks jobs, and from day one, he’s positioned America to seize this massive opportunity,” said Assistant to the President and National Climate Advisor Ali Zaidi. “President Biden recognizes that the right rules of the road are key to durably advance not just our climate ambitions, but also economic opportunity and environmental justice. These principles will help us counter glossy greenwash and other real risks in a nascent and voluntary market and, instead, catalyze mountains of capital to rigorously take on emissions and create good-paying jobs. From scaling climate smart agriculture to standing up clean energy manufacturing, the U.S will continue to build on President Biden’s historic record of climate leadership.”
The Statement and Principles affirm that high-integrity VCMs can and should play a meaningful role in reducing and removing global greenhouse gas emissions and support the objective of global net-zero emissions by 2050. By providing steady, reliable revenue streams, VCMs can deliver additional capital and market support for both existing, credible decarbonization practices, including nature-based solutions, and for innovative climate technologies, including those that scale up carbon removal activities. High-integrity VCMs can also deliver important co-benefits for communities, including supporting economic development, sustaining livelihoods of Indigenous Peoples and local communities, and conserving land and water resources and biodiversity.
Today’s announcement also highlights the numerous initiatives being pursued across the Biden-Harris Administration to encourage the responsible development of VCMs, including: direct carbon removal purchases by the Department of Energy; the buildout of market infrastructure and support by the Department of Agriculture; the Department of State's leadership in negotiating international climate agreements and in supporting high-integrity crediting initiatives, such as the LEAF Coalition and Energy Transition Accelerator; and the Department of the Treasury’s release of principles to support private sector net-zero transition planning.
Today’s announcement also includes new actions to strengthen these markets. These include the release of a Request for Information by the Department of Agriculture asking for public input relating to the protocols used in VCMs, furthering its work to implement the Growing Climate Solutions Act, and the announcement by the Department of Energy of the semifinalists for its $35 million Carbon Dioxide Removal Purchase Pilot Prize.
"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,” said Agriculture Secretary Vilsack. “At USDA, through implementation of the Growing Climate Solutions Act and related efforts, we are already working to facilitate producer participation and drive more integrity and confidence in this evolving marketplace."
The Statement and Principles were developed in close coordination with the Office of the Special Presidential Envoy for Climate. “The Statement and Principles align with the United States' efforts to enhance carbon credit market integrity internationally, including through the ETA and LEAF initiatives, to address international aviation emissions, and under Article 6 of the Paris Agreement,” said Sue Biniaz, Principal Deputy Special Envoy for Climate.
