New Rules for Carbon Offsets

New Rules for Carbon Offsets

The Biden Administration recently unveiled guidelines for “responsible participation” in the voluntary carbon offset market. Will they give the sector a much needed boost of confidence?

The voluntary carbon offset market, in which companies and individuals can purchase carbon offsets to mitigate emissions from polluting activities (such as manufacturing, travel, and building operations), has been plagued by controversy, with recent investigations revealing that a portion of carbon offset projects range from ineffective to fraudulent.  

New Rules for Carbon Offsets

While there are many high-quality carbon offset projects, others lack integrity.  For example, carbon offsets are sometimes attributed to projects, like solar installations, that don’t add ‘additionality’, meaning that they would have been constructed anyway.  

Some dubious projects have double accounting, where an activity, like planting a tree, that generates carbon offsets is sold multiple times.  Other questionable projects involve habitat restoration or ecosystem protection projects in areas that were never under any real, verifiable threat.  

Other disputed projects are considered to be temporary, where the sequestration of carbon only lasts a few years before that carbon is emitted back into the atmosphere.

With the aim to establish a new order and restore confidence in the carbon offsets market, President Biden’s top climate and economic advisors recently issued the Voluntary Carbon Markets Joint Policy Statement and Principles, a set of guidelines intended to differentiate high-integrity projects from bad actors.

The principles endorse existing guidance from organizations like the Integrity Council for the Voluntary Carbon Market and the Voluntary Carbon Markets Integrity initiative, adding legitimacy to the nascent voluntary carbon offsets market, which is expected to grow from $2 billion today to $1 trillion by 2050.  

The policy statement, signed by the Secretary of the Treasury, Secretary of Agriculture, and Secretary of Energy, recognizes that “high-integrity voluntary carbon credit markets (VCMs), as well as carbon credit markets more broadly, have the potential to support decarbonization efforts within the United States and globally, accelerating net emissions reductions while reducing their cost.  They can achieve this by further unlocking capital and demand for real, additional, lasting, and independently verified emissions reductions and removals. Such markets can also provide myriad co-benefits by supporting economic development, sustaining livelihoods of local communities, and conserving land and water resources and biodiversity.”

“High-functioning VCMs can connect buyers to cost-effective, high-quality emissions reduction and removal credits, creating meaningful economic opportunities for credit sellers,” the document continues. “They can also help private sector buyers drive additional climate ambition today, through large-scale efforts such as nature-based decarbonization. Demand signals in VCMs can also help technologies for carbon removal and long-term storage become more cost effective in the future and support greater purchase volumes of associated carbon removal credits.”

The principles specify that high-quality carbon offset projects should:

  • Meet credible atmospheric integrity standards and represent real decarbonization, ensuring that projects are certified to a robust standard that guarantees offsets are additional, unique, quantifiable, verified, and permanent.
  • Be certified by transparent and accountable standard bodies that use science-backed metrics, eliminate double-accounting and conflict of interest risks, and offer publicly available reporting.
  • Address environmental and social justice issues in the communities in which they operate, specifically related to local communities, land use, food security, and biodiversity.
  • Encourage “credit users” and corporate buyers to reduce emissions within value chains, take inventory of and report on scope 1, 2 and 3 emissions, and undertake other decarbonization activities (this is presumably to avoid greenwashing.)
  • Disclose purchased cancelled, and retired credits.
  • Guarantee the accuracy of public claims, including demand-side credit standards and codes of conduct.
  • Improve integrity for participants on both the buy and sell side of the market through efforts such as fair pricing and distribution of revenue, equitable treatment of suppliers, and prevention of fraud and manipulation by bad-faith actors undermining credit integrity.
  • Facilitate efficient participation with low transaction costs to ensure market stability, bolster decarbonization, and optimize economic opportunity.

Carbon Offsets for the Building Industry

Carbon offsets are particularly important in the building industry because the built environment is one of the most conspicuously consumptive sectors of our economy. The sourcing and manufacturing of materials, construction process, and ongoing operations of homes and buildings require an immense amount of energy and emit substantial pollution.

While a sustainable built environment begins with climate-responsive design, energy efficiency, electrification, renewable energy, water conservation, and ecosystem protection, the purchase of high-quality carbon offsets allows builders, developers, manufacturers, energy companies, and homeowners to mitigate the emissions from homes and reach the “last mile” of their climate targets.

The responsible use of carbon offsets is both prudent and essential, particularly in light of the fact that there simply aren’t enough carbon-neutral products, transportation options, manufacturing innovations, or installation practices available to create structures that are net zero embodied carbon at this time.

In response to growing demand from stakeholders throughout the building industry, Green Builder Media has launched the COGNITION Carbon Offsets Marketplace to streamline access to carbon offsets.  We’re only offering high-integrity, science-backed, and properly vetted projects.  

To learn more and buy your offsets today, visit the COGNITION Carbon Offsets Marketplace

Got questions about carbon credits or want to learn how many credits you need to purchase to offset your projects, products, homes, transportation, and lifestyle?  Shoot me an email at