Co-signed by key figures such as Treasury Secretary Janet Yellen and Energy Secretary Jennifer Granholm, this statement underscores the potential of VCMs in supporting global decarbonisation efforts.

The guidelines have been launched to help overcome current integrity challenges, promote robust standards, ensure fair treatment of participants, and instill market confidence. 

Complementing President Biden's ambitious climate agenda, which aims to cut greenhouse gas emissions by half by 2030 and reach net zero by 2050, the new VCM principles provide a reliable revenue stream for decarbonisation projects.  

These projects include nature-based solutions and innovative technologies that scale up carbon removal, offering co-benefits such as economic development, conservation of natural resources, and support for local communities. 

Overview of VCM Principles 

The newly released guidelines for VCMs encompass seven key principles:

Principle 1 - "Carbon credits and the activities that generate them should meet credible atmospheric integrity standards and represent real decarbonisation."

What this means: Carbon credits must be verified through rigorous standards to ensure they result in genuine, additional emissions reductions or removals that are permanent and quantifiable. 

Principle 2 - "Credit-generating activities should avoid environmental and social harm and should, where applicable, support co-benefits and transparent and inclusive benefits-sharing."

What this means: Projects should prevent negative impacts on communities and the environment while promoting positive outcomes such as sustainable development and biodiversity conservation. 

Principle 3  - "Corporate buyers that use credits (“credit users”) should prioritise measurable emissions reductions within their value chains."

What this means: Companies should first focus on reducing emissions across their operations before relying on carbon credits to offset their remaining emissions. 

Principle 4 - "Credit users should publicly disclose the nature of purchased and retired credits."

What this means: Companies must transparently report their carbon credit purchases and retirements to ensure accountability and enable assessment of the credits' integrity. 

Principle 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." 

What this means: Claims about carbon credits should be truthful and based on high-quality credits, ensuring they reflect genuine climate benefits and do not mislead stakeholders. 

Principle 6 - "Market participants should contribute to efforts that improve market integrity."

What this means: Participants in the VCM should work to enhance the market's overall functionality, transparency, and fairness, preventing fraud and promoting equitable revenue distribution.

Principle 7  - "Policymakers and market participants should facilitate efficient market participation and seek to lower transaction costs."

What this means: Efforts should be made to reduce barriers for credit providers, particularly small businesses and developing regions, to foster a more inclusive and efficient market. 

Why VCM Principles Matter 

The release of these principles is significant for several reasons 

- Commitment to Environmental Integrity 

By ensuring that carbon credits represent genuine emissions reductions or removals, the policy addresses scepticism about the effectiveness of VCMs.  Each credit must equate to one tonne of CO2 removed or reduced, beyond what would have occurred otherwise, emphasising measurable and verifiable outcomes. 

- Restoring Market Confidence

The statement acknowledges past issues with crediting methodologies that failed to deliver on promised decarbonisation outcomes. By addressing these shortcomings and setting high standards, the administration aims to restore trust in the VCM, essential for attracting private capital to fund climate solutions effectively. 

- Inclusive Economic Opportunity  

These principles provide a framework for equitable participation and economic opportunity across diverse sectors. From farmers in rural communities to innovative tech companies and underserved entrepreneurs, the policy ensures that VCMs can support a wide range of stakeholders.  This inclusive approach drives climate action while fostering economic growth and resilience. 

Jaclyn Foss, VCM Business Development Manager at CFP Energy, said: 

"We're pleased to see the publication of the VCM principles by the Biden-Harris Administration, which represent a bold and positive step towards achieving high-integrity carbon markets that can drive significant climate action. 

By addressing integrity issues, promoting fairness, and instilling confidence, these guidelines ensure that VCMs can fulfil their potential in the global fight against climate change. 

This policy not only supports environmental sustainability but also creates economic opportunities, marking a pivotal moment in the journey towards a greener future." 

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