On May 28, the White House issued a statement of principles for stakeholders to consider when participating in voluntary carbon markets. The document is intended to diagnose flaws in the current global carbon markets and chart a course towards greater transparency and efficiency. While the statement indicates the Biden administration’s interest in directing private-sector capital to climate mitigation activities, it does not propose anything that has not already been identified elsewhere, commit the government to any near-term action, or acknowledge how new technology supports creation of high-integrity carbon credits. 

Voluntary Carbon Markets Joint Policy Statement and Principles, May 2024 from the White House
Voluntary Carbon Markets Joint Policy Statement and Principles, May 2024

The administration is correct in noting that the current market is plagued by a lack of transparency and standardization resulting in low-quality carbon credits. Absent regulatory oversight, the market continues to be fractured and segmented, with different NGOs and non-profit organizations enforcing different rules and standards leading to inconsistency and obfuscation between methodologies and projects.

But in identifying these flaws, the principles fail to provide clarity on key definitions that market participants need. Additionality, for example, often forces an offset project to prove a counterfactual about what “would have happened” in its absence. There are voices in the carbon space that can (and will) debate the additionality of any carbon project that generates credits. Permanence is similarly difficult to define; some project types consider 50 years to be permanent, others consider the threshold 10,000 years. 

Rather than a top-down review of a carbon credit against any external criteria, the key to ensuring a credit represents real emissions reductions is robust quantification of carbon itself from the bottom-up. If a project can prove what happened, when it happened and how it happened through accessible and trusted data, top-level concepts such as additionality and permanence can be evaluated appropriately by buyers. 

Technology exists right now to make this emissions data available for carbon projects across sectors.  At a minimum, emissions data must be independently collected using objective quantification methods. No single data point can be the sole source of truth which is why multiple contextually relevant sources are critical to strengthen mitigation claims. Most importantly, the data trail supporting these credits should be immutable, auditable, and accessible by third parties.  

Context Labs looks forward to continuing its work with federal agencies building these principles into carbon accounting programs such as the Department of Energy’s global coordination of measurement, monitoring, reporting and verification (MMRV) of methane emissions, and the Commodity Futures Trading Commission’s proposed criteria for listing of carbon credits. 

These are essential first steps, but the world is starting to move quickly on this issue. In February the EU announced its Carbon Removal Certification Framework, the world’s first regulatory framework for certification of carbon removal credits and a potential global standard in the voluntary carbon market. If the US is to lead on climate investment and establish its own high-integrity domestic voluntary carbon market, a statement of principles will not be enough. 

Click here to learn more about our carbon credit creation solution.