US Treasury secretary calls on business to prioritise emissions cuts as voluntary markets draw fire.
US Treasury Secretary Janet Yellen is set to urge companies to prioritize direct emissions reductions rather than relying on carbon credits as a primary strategy for combating climate change. Her remarks, scheduled for Tuesday, will accompany the unveiling of new guidelines for voluntary carbon credit markets. These markets, while popular among companies seeking to offset their emissions, have faced criticism for not always delivering the promised carbon removals.
Yellen will emphasize the Biden administration’s support for the success of carbon credit markets but will call for a strong commitment to integrity from both developers and corporate buyers. She will stress that companies should focus on reducing their own emissions through strategic planning, setting net-zero targets, and transparently reporting progress. Participation in voluntary carbon markets should enhance these efforts, with purchased credits representing genuine emissions reductions or carbon removals.
The critique of current carbon credit practices comes amidst findings that some credits fail to meet necessary criteria. For example, a recent study revealed that certain carbon credits, used by major companies like Eon, Shell, easyJet, and British Airways, were largely ineffective. Despite these shortcomings, US officials aim to foster high-integrity markets, leveraging all available tools creatively and at scale.
Yellen’s perspective aligns with broader efforts to harness market power and private capital for climate action. Former US climate envoy John Kerry supports voluntary carbon markets, having initiated a State Department-led program in 2022 to decarbonize regional power sectors. This initiative seeks to improve upon existing models by using national data to measure actual emissions reductions.
Several major corporations, including Bank of America, Morgan Stanley, Standard Chartered, Amazon, Boston Consulting Group, Mastercard, McDonald’s, PepsiCo, Salesforce, and Schneider Electric, have endorsed this initiative. At the COP28 climate summit last December, Kerry highlighted the issue of disreputable operations selling ineffective carbon credits, noting the harm they have caused to genuine climate efforts.
