Voluntary Carbon Markets Joint Policy Statement and Principles

A group of U.S. federal departments and offices, including the White House, the U.S. Department of the Treasury, the U.S. Department of Energy and the U.S. Department of Agriculture has released the Voluntary Carbon Markets (VCM) Joint Policy Statement and Principles.

This statement demonstrates support from the U.S. federal departments and offices towards high‑integrity voluntary carbon credit markets to advance decarbonization efforts both domestically and globally. The statement asserts that by unlocking capital and generating demand for real, additional, lasting and independently verified emissions reductions and removals, these markets are anticipated to speed up net greenhouse gas (GHG) emissions reductions and lower associated costs.

The statement identifies the following key principles:

1. Credibility Requirements – Carbon credits and the activities that generate them should adhere to credible atmospheric integrity standards and represent genuine decarbonization. They should encompass elements such as being additional,^[1] unique, real and quantifiable, validated and verified, permanent in terms of GHG benefits and based on robust baselines.
2. Promote Co-benefits – Project and program developers should aim to enhance positive impacts by delivering verified “co-benefits” such as sustainable economic development and increased biodiversity. They should avoid negative externalities in their operating communities by implementing safeguards to prevent adverse impacts on people and the environment, including local communities, land use, rights, food security, nature, and biodiversity.
3. Altering Business Models – Business models across economies will need alterations to achieve long-term climate goals. As a part of their net-zero strategies, businesses should use VCMs to complement measurable within-value-chain emissions reductions. This involves taking inventory of Scope 1, Scope 2 and Scope 3 GHG emissions, regularly reporting them, setting near-term emissions reduction targets, establishing longer-term net-zero targets and adopting and executing transition plans.
4. Public Disclosure – The disclosure of purchased, canceled or retired credits should occur at least annually. This disclosure should include details that allow stakeholders to evaluate whether the credits are of high integrity and free from negative environmental and social impacts.
5. Validity of Carbon Claims – Claims should avoid adverse impacts and be based solely on the impact of credits that meet high integrity standards at the time the claim is made. Carbon credits should not be used for claims if they have been reversed, revealed as inflated or found to fail environmental or social safeguards unless remediation, such as replacement with buffer pool credits, has been conducted.
6. Enhance Market Functionality – Carbon credits are traded via private contracts (over‑the‑counter) and exchanges. Stakeholders should improve market functionality for all participants by: incentivizing high-integrity credits; increasing transparency and public data on projects, transactions, and prices; ensuring fair treatment and revenue distribution for credit suppliers; managing conflicts of interest among VCM service providers; preventing fraud and manipulation; providing clear accounting and legal guidelines for credits; enabling global standards interoperability and supporting equitable participation.
7. Facilitate Efficient Market Participation – Policymakers and buyers should enhance market certainty for carbon credit project developers investing in decarbonization and relying on VCM revenues. Using scientific models, supported by government investment, can reduce monitoring, measurement, reporting and verification costs and improve credit integrity. Addressing barriers like high transaction costs for suppliers, such as farmers, ranchers, forest owners, small businesses, and developing countries, can improve VCMs’ ability to produce high-integrity credits and help generate economic opportunities.

How can Orrick help:

Want to know more? Contact one of the authors.