In May 2024, multiple U.S. government agencies released guidance on voluntary carbon markets (VCM) for the first time in history. Co-signed by the U.S. Departments of the Treasury, Agriculture, and Energy, the joint statement provided observations on the state of voluntary carbon markets today and outlined seven principles that market participants in the U.S. should embrace as they engage in these markets. The framework underscores what’s most important when it comes to carbon markets – ensuring that we deliver real emissions reductions.
The U.S. government has seen the voluntary market for carbon credits grow from $360 million in 2019 to $2.5 billion in 2023. This growth, in combination with market volatility, fraud, and recent guidance from the SEC and the Commodity Futures Trading Commission, has left NGOs and Fortune 500 companies alike appealing to the Department of the Treasury for leadership. This long-awaited guidance legitimizes the VCM and signals that the federal government will no longer stand idle as the market develops on its own.
While the seven recommended principles are table stakes for involvement, they provide the strongest reinforcement to the rules and regulations of existing standards bodies.
Far too frequently, carbon credits don’t live up to their promised emission savings. With new guidance and continued involvement from the federal government, the market can ensure it delivers high-integrity credits with a real impact on climate.
A look at the guidance
A couple of the new principles we are most excited about:
Credit users should publicly disclose the nature of purchased and retired credits.
At least 50% of carbon credit purchases today are made anonymously. At ClimateWells, we significantly de-risk disclosures by giving purchasers control from project initiation. Carbon buyers can also feel proud of the local action of our projects and more easily claim tangible benefits to the areas where their employees and customers live.
Policymakers and market participants should facilitate efficient market participation and seek to lower transaction costs.
In our view, this principle takes aim at antiquated project verification firms that charge high fixed fees regardless of project type and complexity. By intentionally seeking to lower transaction costs and emphasizing efficiency, voluntary carbon market participants and policymakers alike can push the industry toward living up to its full potential.
ClimateWells credits to shut down high-emitting, low-producing oil and gas wells are more affordable than most credit-generating activities, which bear the costs of long-term ecosystem management, onsight sampling, and governmental involvement. Our projects do not require expensive intermediaries and third party stakeholders to make an immediate impact.
Looking ahead
We’re proud to be creating high-integrity carbon credits that help corporations and individuals reach their climate goals. Every ClimateWells project is independently verified and registered to ensure a real and tangible impact – and our projects store emissions permanently, keeping everything underground for centuries. With continued government support and guidance, we look forward to seeing the voluntary carbon market continue to grow and establish itself as a reputable, reliable source for climate strategy and emissions reductions.
