Biden administration set to lay out first-ever broad guidelines for carbon markets
Biden administration, led by Treasury Secretary Janet Yellen, will introduce the first US guidelines for carbon markets this week. This marks a significant step forward for advocates of emission offsets in the fight against global warming.
The aim is to promote what the US terms ‘high-integrity carbon markets’ and improve the credibility of this controversial climate solution.
Despite growing interest in using offsets to fund decarbonization efforts, concerns have arisen because projects have failed to deliver promised emission reductions.
The current offset market stands at approximately $2 billion, but demand could soar with backing from the US government. BloombergNEF forecasts that by 2050, the market could balloon to $1 trillion if regulators relax certain standards and authorize their utilization in regulated emissions trading and carbon tax schemes.
Also read: US regulatory body investigates malpractice in the voluntary carbon market
The guidelines will also emphasize that companies should not rely solely on credits to offset their Scope 3 emissions from suppliers and customers. These emissions are challenging for businesses to mitigate as they lack direct control over them.
The question of whether offsets should be employed to offset these emissions has sparked intense debate among climate experts.
“This announcement is bringing the weight of the US government,” said Pedro Barata, an associate vice president at the Environmental Defense Fund and co-chair of the ICVCM’s panel of experts. It gives “an imprimatur of confidence from a very important stakeholder.”
The guidelines will not prohibit companies from using credits to offset emissions within their supply chains but will suggest that they should be reserved for exceptional cases, such as when it’s currently not technically feasible to make improvements.
According to a source familiar with the matter, there will be specific criteria outlining what could be deemed as credible uses of carbon credits in such situations.
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