Voluntary Carbon Markets: Environmental Impact, Controversy and Challenges, Evolving Regulatory Landscape

Description

Under pressure to reduce their carbon footprint, many companies have turned to carbon credits or "offsets" as part of an overall plan for carbon reduction. Carbon credits can be traded on a voluntary marketplace, which connects buyers of emission reduction and removal credits to sellers. But a series of high-profile controversies has called into question the effectiveness and integrity of using these markets, leading to greenwashing accusations against some users.

In an effort to restore confidence in and strengthen VCMs, the White House recently released VCM guidance that provides observations on the current state of VCMs and their potential and outlines seven principles that should guide U.S. VCM market participants. While the guidelines are non-binding, they demonstrate the government's focus on VCMs.

There are also ongoing efforts on federal, state, and international levels to regulate VCMs. For example, the Commodity Futures Trading Commission (CFTC) finalized guidance on Sept. 20, 2024 with the goal of advancing "the standardization of voluntary carbon credit derivative contracts in a manner that fosters transparency and liquidity, accurate pricing, and market integrity." California has recently enacted legislation to promote the transparency and integrity of VCMs with certain public disclosure requirements. And the EU has banned the use of environmental claims for products that are based solely on offsetting and which may impact VCMs.

Listen as our expert panel provides a comprehensive overview of the current state of VCMs and VCM regulation. The panel will examine whether and to what extent VCMs may be a viable tool to help reduce GHG emissions. The panel will also offer best practices for advising clients on navigating VCMs.