Summer Policy Roundup
The Scorcher is back from summer break. While we were away, the carbon market experienced several policy developments both domestically and internationally. California’s Cap-and-Invest program has passed the State Legislature and heads to Governor Gavin Newsom for signage. Meanwhile preparations for COP30 are underway, signaling growing momentum to advance the use of carbon markets to drive climate impact. Here are some notable updates from this summer.
California Cap-and-Trade Bills Passed
Throughout the summer, Cap-and-Trade (renamed Cap-and-Invest) remained a major topic of discussion across the carbon market and related sectors. Despite market uncertainty surrounding the program’s reauthorization, strong advocacy from NGOs, businesses, and other organizations helped push key legislation forward.
AB1207 and SB 840, both passed with a two-thirds majority in each chamber this past Saturday, setting the program up for continued success. These bills focus heavily on the market-based mechanisms of the program and the allocation of Greenhouse Gas Reduction Fund (GGRF) revenues, which help finance state community programs from the sale of allowances.
Key provisions in both bills include extending the program beyond 2030 to 2045, allowing for the continued use of offsets up to 6% of a covered entity’s obligation and authorizing State ARB to study and make recommendations to the State Legislature for ongoing program improvements. The bills now head to Governor Gavin Newsom for signature.
A range of op-eds and public letters endorsed by TCT and a wide-range of other market participants were published in support of reauthorizing the program, emphasizing the continued use of carbon offsets as a means to enhance emissions reductions and deliver community co-benefits. The letters can be found here.
ICVCM Approves ACR IFM and Reforestation Methodologies
The Integrity Council for the Voluntary Carbon Market (ICVCM) has approved ACR’s Afforestation and Reforestation of Degraded Lands and the Improved Forest Management (IFM) on Non-Federal U.S. Forestlands v 2.1 methodology to receive the Core Carbon Principles (CCP) label. This decision marks a significant milestone, while market participants continue to seek guidance on which methodologies and projects align with the carbon market’s core principles. This move signifies progress in identifying high-quality methodologies that support the shared mission of reducing global emissions and meeting the goals outlined in the Paris Agreement. The Council aims to complete assessments for all submitted methodologies that have issued credits by the end of the year according to an ICVCM governing board member [1]. The Climate Trust has several ACR reforestation and IFM projects under development. Check them out here. ICVCM also awarded the CCP label to several nature based methodologies including: Verified Carbon Standard’s VM0045 Improved Forest Management Methodology Using Dynamic Matched Baselines from National Forest Inventories, v 1.2 and VM0047 Afforestation, Reforestation, and Revegetation, v 1.0 methodologies, along with the Climate Action Reserves’ (CAR) Mexico Forest Protocol v 3.0.
Proposal to Rescind Endangerment Finding
The Environmental Protection Agency (EPA) has proposed rescinding its scientific endangerment findings that identify GHGs as a threat to human health, under EPA Administrator Lee Zeldin. This move would roll back many emission standards. The U.S. Supreme Court ruled in 2007 that the EPA has the authority under the Clean Air Act to regulate greenhouse gases and determine whether they pose a threat to public health [2]. In 2009, under President Obama, the agency issued a scientific finding that GHGs do, in fact, endanger human health.
The proposal is open for public comment until September 22, and if enacted, it could impact emissions reduction policy across the market.
U.S. GAO Report on Regulating the VCM
On August 13, the U.S. Government Accountability Office released a report examining federal efforts, or lack thereof, in voluntary carbon markets. The study highlights general insight over transparency, market integrity, and quality assurance. The federal government does not currently have regulatory authority over the voluntary carbon market (VCM) however, agencies such as the Commodities Future Trading Commission (CFTC) and Federal Trade Commission (FTC) have issued guidance and exercised some oversight over the markets’ activities. Although the report suggests viewpoints amongst the expert participants were not aligned specifically, various statements suggest agencies could enhance credibility through endorsing efforts around transparency, countering fraud, protecting consumers, and regulating credit quality (if they have the authority) [3]. Although whether such oversight is necessary remains debatable. This emerging oversight on the federal level however, could build confidence in the VCM and encourage its continued use as a tool for advancing climate action.
Article 6 Updates
Progress around Article 6.4 of the Paris Agreement has been moving along. Since convening at COP29 and while preparations are underway for COP30 this November, the body has been working hard to further progress. There were various open public consultation periods for proposed methodologies and standards on additionality, baselines, and leakage (they are looking to adopt language around non-permanence and reversals soon) which were adopted. The body also launched a call for Article 6.4 experts, which adds additional credibility and guidance to the program’s overall operation.
Since the Paris Agreement Crediting Mechanism (PACM) is still under development, specific methodologies and protocols have not yet been finalized. However, the Supervisory Body has launched an interim registry in the meantime, with guidance expected soon to support its use. Efforts to strengthen the program will continue through ongoing workshops, stakeholder engagement, and training for national authorities to prepare for full implementation of the mechanism.
With just two months remaining until COP30, we are hoping for significant developments aimed at operationalizing the PACM for full-scale use. So far, only a few countries have submitted their Nationally Determined Contributions (NDCs) that include the use of PACM. It will be especially interesting to watch how this evolves in the coming weeks, as more countries clarify their commitments.
Maine Enacts New Forest Carbon Transparency Law
Maine passed a new law (LD 39), requiring forest landowners participating in carbon offset projects to annually report their involvement to the Department of Agriculture, Conservation, and Forestry, effective January 2026. This applies to participants in both voluntary and compliance carbon markets. In the report, landowners must include key project details (project name, contact, enrollment period, acreage, and protocol/registry) but no financial disclosures are required. The legislation aims to increase transparency around forest carbon activities in Maine and support analysis of their potential impacts on the state’s forest products industry. With this move, Maine joins New Hampshire as one of only two states actively collecting data on their state’s landowners participating in carbon markets [4].
What’s Next
The need for climate action has never been more urgent. Ongoing developments and critical decisions throughout the summer show how participation in the carbon market is crucial to addressing this challenge. Stay informed by subscribing to our newsletter and turning on post notifications to receive new insights delivered to your inbox every week!