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Voluntary Carbon Market Policy Must be Practical

Published: May 2, 2024 by

2023 was a defining year for carbon credits, characterized by registries, developers, and end buyers responding to calls for more stringent project requirements. Carbon markets continue to be a force accelerating corporate climate action by driving billions of dollars a year towards reducing or directly removing GHG emissions [1]. Much of this work to sharpen the focus of the VCM has been viewed positively both inside and outside the market, with widespread agreement that tangible ways can and do exist to improve the efficacy of carbon credits. This has been exemplified by international initiatives such as the Integrity Council for Voluntary Carbon Market’s Core Carbon Principles (CCPs) and the UN International Civil Aviation Organization’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) leading the way to enact workable frameworks in support of a transparent and high integrity carbon market. The collaborative nature of these initiatives emphasizes the need for new frameworks and policy measures in the VCM to be practical and compatible with current market conditions.

Although efforts to advance standardization, quality, and continuity in the market are good, they must be designed in a way that stimulates improvement without stifling progress. One example where this focus needs to sharpen is California Senate Bill 1036, introduced in February 2024, that seeks to make the use of voluntary carbon offsets subject to California’s False Advertising Law [2]. The bill mirrors a similar bill that was rejected last year, in part due to the challenge of interpreting who the legislation might inadvertently affect negatively, both inside and outside the state. SB 1036 is intended to ensure that carbon credits are based on high quality, high integrity GHG emissions reductions and removals by making it unlawful to develop, verify, market, or sell credits from projects that are “unlikely to be quantifiable, real, and additional” [3]. In concept, this goal is laudable and would help to reduce concerns of corporate greenwashing, increasing confidence in the VCM. However, in practice the bill would be extremely difficult to enforce, leaving it up to courts to evaluate complex GHG accounting methods of individual projects. The reliance on civil litigation to interpret highly technical carbon accounting concepts across project types is particularly concerning given that the basis for justification uses vague language such as “knows or should know” and “unlikely” to litigate against. As currently proposed, the bill would undermine the VCM by creating significant liability and uncertainty for well-intentioned market participants who may risk obscure, expensive, and time-consuming litigation.

The Climate Trust, and a number of other entities active in the VCM submitted comments to the California Senate Environmental Quality Committee to suggest changes and voice concerns surrounding specific language. Chief among these is how the bill would fundamentally discourage participation in carbon markets thereby stymying much needed investment into a variety of critical climate solutions. The Climate Trust supports on-going efforts to improve and evolve the carbon market with new policy instruments and voluntary frameworks, but they should be carefully crafted to avoid curtailing investment into climate solutions. We look forward to seeing revisions to SB 1036 that incorporate stakeholder feedback.


[1] Companies and Carbon Credits: From Anecdote to Evidence

[2] Reintroduced California Bill Would Subject Voluntary Carbon Offsets to the State’s False ‎Advertising Law

[3] SB 1036 Voluntary carbon offsets: business regulation