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Companies should prioritise slashing their carbon emissions and not rely on buying carbon credits to save the climate, US Treasury secretary Janet Yellen will say on Tuesday.
The remarks come as she unveils new guidelines for voluntary carbon credits, which are popular among companies looking to offset their emissions but have attracted criticism for failing to deliver the carbon removals they promise.
Yellen will say the Joe Biden administration wants carbon credit markets “to succeed”, but will call for a “commitment to integrity” from developers selling the credits and from corporations buying them to offset their emissions.
“Corporate buyers should prioritise reducing their own emissions, particularly through transition planning, adopting net zero targets, and transparently reporting on progress,” Yellen will say. “Participation in [voluntary carbon markets] should complement these efforts.”
Credits purchased should represent real emissions reductions or carbon removals. “To date, we’ve seen too many examples where credits failed to meet these criteria,” she adds.
Several projects have come under fire for inaccuracies in their carbon counting methods.
Earlier this month, a new study found that a type of carbon credit used by companies including Eon, Shell, easyJet and British Airways to justify continuing to pollute through their own operations was largely worthless.
Despite these failures, US officials are hoping to encourage “high-integrity” markets. “We need to use all the tools at our disposal — creatively, thoughtfully, and at scale,” Yellen will say. “I believe that harnessing the power of markets and private capital is critical.”
Former US climate envoy John Kerry has thrown his weight behind voluntary carbon credit markets, launching a state department-led initiative in 2022 aimed at decarbonising regional power sectors.
It is meant to improve on existing voluntary models by using high-level national data and measuring emission reductions in relation to the past, rather than hypothetical future emission savings.
Companies including Bank of America, Morgan Stanley and Standard Chartered have backed the initiative, alongside Amazon, Boston Consulting Group, Mastercard, McDonald’s, Morgan Stanley, PepsiCo, Salesforce and Schneider Electric.
Speaking at the COP28 climate summit last December, Kerry acknowledged that “fly-by-night operations” touting cheap carbon credits in recent years have “done an injustice to everybody”.
