The US government's role in addressing concerns about the legitimacy of offsets bought and sold in voluntary carbon markets (VCM) remains limited, but experts are conflicted over whether Washington should have a larger presence, according to a non-partisan government watchdog.
Much of the actions taken by the US government with regards to the voluntary markets in recent years has been relegated to providing oversight or guidance, according to a report released by the US Government Accountability Office (GAO) on Wednesdsay. The most recent examples include guidance issued by the US Commodities Futures Trading Commission in September 2024 to help enhance the integrity of voluntary carbon credits tied to derivatives contracts, as well as a program launched by the Department of Energy last year that enables participants to compete to sell carbon credits directly to the agency.
But GAO noted in the report that such "efforts could change as government priorities evolve."
The agency also interviewed eight experts — including current and former regulators, research scientists and policy analysts — on the steps that the government could take to improve the legitimacy of voluntary carbon credits generated from emissions reduction or offset projects. Key concerns with such offsets are the potential lack of additionality — or reductions that would not have otherwise occurred — the permanence of stored carbon and over-crediting.
The experts had varying views on the federal role. Some supported the government taking a more proactive role in promoting data transparency, countering fraud and protecting consumers of carbon credits by maintaining a registry, for example. Others pushed back at the idea of the government regulating the quality of voluntary carbon credits, saying it would require significant resources.
The report also included a review of 21 studies which showed that many projects — mostly forestry as well as hydro and wind power projects — either suffered from over-crediting or did not represent additional reductions in emissions.
The report also noted that the lack of transparency in VCM is due to a lack of standardization in credits — credits are generated from various types of projects and have varying levels of quality.
Voluntary carbon credits have been subject to scrutiny and criticism by federal and state governments as well as market observers and environmental groups. Companies have faced criticism for "greenwashing" their products through the purchase of credits that were likely generated from questionable projects, and some, like Apple and Delta Air Lines, are dealing with lawsuits as a result.
In addition, government-run compliance markets such as the Regional Greenhouse Gas Initiative (RGGI) are walking back their use of carbon offsets. RGGI recently decided to eliminate the use of offsets for compliance starting in 2027.
But many companies hope to leverage voluntary markets to help spur innovation in emerging technologies, such as direct air capture (DAC). 1PointFive, a carbon capture, utilization and sequestration company, recently signed an agreement with a US cybersecurity company to sell 10,000 DAC credits generated from its new facility in Texas.
