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1) Joint Policy Statement and Principles on Voluntary Carbon Markets -- Treasury/DOE press release

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. . . .

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 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. . . .

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. . . .

Joint Policy Statement and Principles: https://www.whitehouse.gov/wp-content/uploads/2024/05/VCM-Joint-Policy-Statement-and-Principles.pdf

Treasury: https://home.treasury.gov/news/press-releases/jy2372
DOE: https://www.energy.gov/articles/biden-harris-administration-releases-joint-policy-statement-and-principles-voluntary

2) Remarks by Treasury Secretary Yellen on High-Integrity Voluntary Carbon Markets

. . . High-integrity VCMs offer significant potential economic and climate opportunities. They can enable buyers to source cost-effective credits from different technologies, ecosystems, and geographies. And they can channel capital towards the most effective climate solutions. Today, VCMs are relatively small. But these markets have the potential to support significant decarbonization—if we address some key challenges. . . .

Unlike commodities like nickel or soybeans that may be physically delivered to the buyer for inspection and use, the emissions savings associated with a carbon credit are generally “delivered” to the atmosphere. This makes it more difficult to assess the quality of carbon credits—that is, whether they really are associated with emissions savings. In recent years, researchers and journalists have found that a number of projects have not delivered the quality or quantity of emissions savings they claimed.

There are also genuinely hard questions of market design, such as how VCMs can ensure that emissions-reducing activities are durable and truly additional.

Fortunately, we’re currently seeing a renewed wave of civil society, corporate, and government resolve to address these challenges. At the Treasury Department, we have been conducting extensive market outreach to understand these challenges and what further actions need to be considered, including related to market oversight and potential regulation. I was pleased to see CFTC Chair Behnam, who has led work in this space for several years, recently propose important guidance on VCM contracts. We are also actively working with international partners, bilaterally and through multilateral fora like the G20, on these issues.

Many of you in this room are also pursuing important efforts. Multi-stakeholder groups like the IC-VCM and VCMI are working to raise integrity standards. Groups like carbon credit rating agencies are looking to provide credit buyers with a clear view into the quality of what they purchase.  

Today, I am proud to mark the next milestone in our collective efforts. Treasury, together with colleagues from across the Administration, and after extensive stakeholder engagement, is releasing a joint statement and key principles to support high-integrity VCMs.

Let me highlight three key aspects of the principles.

First, supply integrity. Carbon credits should meet high-quality atmospheric integrity standards. They should represent real emissions reductions or removals and there should be guardrails to avoid negative environmental and social impact and to support co-benefits like local economic development and biodiversity. To date, we’ve seen too many examples where credits failed to meet these criteria. We know this market can do better, and we’re committed to helping strengthen it.

Second, demand integrity. Corporate buyers should prioritize reducing their own emissions, particularly through transition planning, adopting net-zero targets, and transparently reporting on progress. Treasury’s Principles for Net-Zero Financing and Investment, released last year, provide guidance here. Participation in VCMs should complement these efforts.

Third, market integrity. Many participants have told us that transacting in VCMs is difficult. It’s a fragmented market, with high search costs and low transparency. We encourage market participants to continue efforts to address these challenges through innovative products and services and believe government could play a role here too. . . .

https://home.treasury.gov/news/press-releases/jy2373

3) Administration Announces New Principles for High-Integrity Voluntary Carbon Markets [press release]

. . . The President’s Investing in America agenda has crowded in a historic surge of private capital to take advantage of the generational investments in the Inflation Reduction Act and Bipartisan Infrastructure Law. High-integrity VCMs have the power to further crowd in private capital and reliably fund diverse organizations at home and abroad –whether climate technology companies, small businesses, farmers, or entrepreneurs –that are developing and deploying projects to reduce carbon emissions and remove carbon from the atmosphere.
However, further steps are needed to strengthen this market and enable VCMs to deliver on their potential. Observers have found evidence that several popular crediting methodologies do not reliably produce the decarbonization outcomes they claim. In too many instances, credits do not live up to the high standards necessary for market participants to transact transparently and with certainty that credit purchases will deliver verifiable decarbonization. As a result, additional action is needed to rectify challenges that have emerged, restore confidence to the market, and ensure that VCMs live up to their potential to drive climate ambition and deliver on their decarbonization promise. This includes: establishing robust standards for carbon credit supply and demand; improving market functioning; ensuring fair and equitable treatment of all participants and advancing environmental justice, including fair distribution of revenue; and instilling market confidence.

The Administration’s Principles for Responsible Participation announced today deliver on this need for action to help VCMs achieve their potential. These principles include:

1. Carbon credits and the activities that generate them should meet credible atmospheric integrity standards and represent real decarbonization.
2. Credit-generating activities should avoid environmental and social harm and should, where applicable, support co-benefits and transparent and inclusive benefits-sharing.
3. Corporate buyers that use credits should prioritize measurable emissions reductions within their own value chains.
4. Credit users should publicly disclose the nature of purchased and retired credits.
5. 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.
6. Market participants should contribute to efforts that improve market integrity.
7. Policymakers and market participants should facilitate efficient market participation and seek to lower transaction costs.

High-integrity, well-functioning VCMs can accelerate decarbonization in several ways. . . .

To deliver on these benefits, VCMs must consistently deliver high-integrity carbon credits that represent real, additional, lasting, unique, and independently verified emissions reductions or removals. . . .

VCMs have reached an inflection point. The Biden-Harris Administration believes that VCMs can drive significant progress toward our climate goals if action is taken to support robust markets undergirded by high-integrity supply and demand. With these high standards in place, corporate buyers and others will be able to channel significant, necessary financial resources to combat climate change through VCMs. . . .

https://www.whitehouse.gov/briefing-room/statements-releases/2024/05/28/fact-sheet-biden-harris-administration-announces-new-principles-for-high-integrity-voluntary-carbon-markets/

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