Last week, the White House along with three executive branch agencies signaled their strong support for voluntary climate action by publishing the Voluntary Carbon Markets Joint Policy Statement and Principles. This landmark statement demonstrates the Biden administration’s commitment to high-integrity voluntary carbon markets (VCMs), which it believes “can and should play a meaningful role in facilitating global greenhouse emissions reductions and removals.” In addition to citing the potential benefits of VCMs, the statement outlines seven principles that US market participants should embrace as they engage with these markets.

Catona’s Chief Carbon Officer Rob Lee was among the industry experts who provided government officials preparing the statement with insights on how carbon credits work and what initiatives and challenges currently exist in this rapidly evolving marketplace. Here, Rob shares his thoughts on what the historic statement means for VCMs and businesses participating in them.

What’s the significance of the Executive Branch announcing the VCMs Joint Policy Statement and Principles?

Most significant is that the current administration publicly supports VCMs and has signaled that the VCMs are, and will be, a big part of US climate policy moving forward should this administration continue. Also significant is that three federal agencies issued the statement in addition to the White House. The Department of Agriculture, the Department of the Treasury, and the Department of Energy have different remits and are supported by different segments of the US population with, perhaps, differing political views. I thought that the Department of Agriculture’s engagement was particularly noteworthy, as you might infer that the government seems likely to support carbon projects developed on working lands in the US including forests and agriculture.

What should US businesses learn or understand from reading the joint policy statement and the principles?

By reading the principles, I think businesses will gain a good understanding of what standards this administration would likely point to for any future regulation. The principles reference initiatives already underway to make the VCMs more transparent and credible, like the ICVCM’s Core Carbon Principles (CCPs). The White House and executive branch agencies’ statement expressly encourages businesses to participate in the carbon markets. The CCPs align with the current best practices for businesses to measure and reduce their carbon footprint and then offset any residual emissions using high-quality carbon credits.

The statement by the White House is a strong signal to companies that if they want to start taking climate action, they have “guardrails” within which to operate. Also, the statement helps businesses understand how to prepare a compliance program in anticipation of future regulation.

Do you believe that the policy statement will increase buyers’ trust and confidence in the voluntary carbon market?

I'm not sure that it's going to increase buyers’ trust and confidence in the entire market, necessarily. Carbon credit buyers still must do their due diligence on carbon projects to ensure that the credits meet high standards. However I do think this statement assures buyers that if they’re participating in the VCM, and they’re doing it credibly and in line with the principles, then they’re pursuing a course of corporate climate action with the support from our government. The statement feels more about creating an environment of support for credible participation in the VCM as a valid form of climate action than building trust in the whole of the VCM.

What role do you believe the US government should play in shaping the VCM?

I think every agency will have an important role to play in supporting the VCM ecosystem. The use of credible carbon credits is a vital tool for climate action, and so what the government has done with issuing the statement and principles is give market participants a strong signal that there is and will be a future for high-quality, credible carbon credits. Finally, the government plays a key role in creating stability and an environment where the VCM can thrive. This is done by issuing guidelines, rules, and regulations that allow investors and businesses to operate in the carbon markets with more certainty and confidence.

What effect does the joint policy statement and principles have on businesses in the carbon market sector like Catona Climate?

Access to high-quality voluntary carbon credits is critical for the future. Whether it's under a voluntary program or a compliance program, if you’re a business that wants to be a climate leader, you should start participating in the market today (and partnering with Catona Climate is a great way to do this). If you’re not ready to be a leader today but you are anticipating needing to comply with a regulatory regime and want to prepare, it’s good to connect with a company like Catona Climate that’s working with those corporate climate leaders now, and we can help you get up to speed for what’s to come.

Any final thoughts?

For companies that are curious about or interested in participating in the VCMs, but are sitting on the sidelines because they're not sure what the new standards or emerging regulations might look like, the statement is a clear signpost from the government: if you follow these principles and use credits with these attributes, you should be fine, and you should start doing exactly that. I think it’s a call to action. They’re saying more organizations need to participate in the VCM and start taking incremental action.