Government Intervention in Support of Quality Carbon Credits

Meeting our climate goals requires that we rapidly scale efforts to reduce emissions of greenhouse gases and remove accumulated emissions from the atmosphere.  Markets for carbon credits, while imperfect, provide an important pathway for driving private investments toward necessary and meaningful climate solutions.

The demand for high quality carbon credits is surging as a growing number of companies set climate targets and voluntarily support climate action. In fact, total credits traded in the voluntary carbon market (VCM) during 2021 surpassed $1 billion in dollar terms. However, the markets for these credits face growing scrutiny over the proliferation of low-quality credits with dubious climate benefits. Improvements are needed to bolster confidence and ensure credits provide durable, additional, and real carbon reductions or removals.

Federal leadership could provide valuable clarity in this space, ranging from existing legislative proposals to oversight of credits bought and sold domestically. This jointly authored report by the Bipartisan Policy Center and Carbon Direct, Inc assesses the potential role of the U.S. federal government in driving quality carbon credits by exploring five possible approaches for federal intervention with the potential to foster high-quality carbon credits. These approaches demonstrate a spectrum of possible government interventions with private sector assistance, with the goal of protecting credit buyers from low-quality or fraudulent credits and enhancing credit suppliers’ ability to develop high-quality carbon credits in line with robust protocols.