The Biden administration Tuesday established a series of broad government guidelines for the first time around the use of carbon offsets in an attempt to boost confidence in a method of tackling global warming that is increasingly being criticized.
Companies and private individuals spent $1.7 billion last year voluntarily purchasing carbon offsets, which are intended to offset the climate impacts of activities such as air travel by financing projects elsewhere, such as tree planting, that remove carbon dioxide from the atmosphere, but that wouldn't have happened without the extra money.
Yet the number is growing studies And reports have discovered that there are many carbon offsets just don't work. Some offsets help finance wind or solar projects that would likely have been built anyway. And it is often extremely difficult to measure the effectiveness of offsets intended to protect forests.
As a result, some scientists and researchers have argued that carbon offsets are irredeemably flawed and must be given up entirely. Instead, they say, companies should focus on cutting their own emissions directly.
The Biden administration is now wading into this debate, saying offsets can sometimes be an important tool to help companies and others reduce their emissions, as long as there are guardrails in place. The new federal guidelines are an effort to define high-integrity offsets as offsets that deliver real and quantifiable emissions reductions that would not otherwise have occurred.
“Voluntary carbon markets can help unleash the power of private markets to reduce emissions, but that can only happen if we address important existing challenges,” Treasury Secretary Janet L. Yellen said in a statement. She will discuss the guidelines with other administration officials at an event in Washington on Tuesday.
“The principles released today are an important step towards building voluntary carbon markets with high integrity,” she said.
The new federal guidelines also urge companies to first focus on reducing emissions as much as possible within their own supply chains before purchasing carbon offsets. Some companies have complained that it is too difficult to control their vast network of third-party suppliers and that they should be able to use carbon offsets to address pollution related, for example, to the cement or steel they use.
While the new federal guidelines are neither binding nor enforceable, advocates of voluntary carbon markets say they could help foster a larger market for high-quality offsets that actually work. There are also several private efforts, such as the Voluntary Carbon Market Integrity Boardthat attempt to set out principles for what counts as effective carbon offsets.
“There are credible estimates that the voluntary carbon market could grow to ten to twenty times what it is now, and then you would be talking about real money to tackle climate change,” said Nat Keohane, president of the Center for Climate and Energy . Solutions, an environmental group that supports the use of carbon offsets. “But we won't reach that scale unless buyers have confidence in what they're buying.”
Critics of carbon offsets, however, say the new federal guidelines are too vague and don't do enough to describe what types of projects count as high-quality. Moreover, critics say that without stricter government enforcement of voluntary carbon markets, voluntary carbon markets will still exist lots of cheap, ineffective compensation floating around that companies can continue to buy without consequences.
“If the government doesn't do something to address the bottom end of the market through enforcement, I don't see any low-quality credit going away,” said Danny Cullenward, a senior fellow at the Kleinman Center for Energy Policy at New York University . Pennsylvania.
In California, some lawmakers have submitted a bill that would penalize companies that market offsets that are unlikely to be “quantifiable” or “real.” But this bill has been opposed by business groups and even some environmentalists, who argue it could stifle a source of funding for preserving and protecting forests and other natural areas.
For their part, Biden administration officials say offsets could also help channel investments to poorer countries struggling to raise funds to tackle climate change. While President Biden has pledged more than $11 billion in annual climate assistance to developing countries, Congress has only approved a small part of it.
To combat climate change, “we need to mobilize enormous amounts of private capital,” said John Podesta, Mr. Biden's senior adviser on international climate policy. Voluntary carbon markets, he said, can “support clean energy deployment in developing countries that can benefit most from new investments.”