The Biden administration on Tuesday announced new rules to govern the use of voluntary carbon credits, seeking to bolster public confidence and new investments in an emissions reduction scheme that has come under mounting public criticism. 

Senior administration officials said the new policies are intended to be “guardrails” ensuring responsible participation in high-integrity voluntary carbon credit markets, or VCMs — a method by which companies and individuals can reduce their emissions profiles by financing renewable energy projects and other climate-friendly projects, such as reforestation, in other parts of the world.

“Voluntary carbon markets can help unlock the power of private markets to reduce emissions, but that can only happen if we address significant existing challenges,” Treasury Secretary Janet Yellen said Tuesday in announcing the effort.

Carbon credit markets have soared in the last 10 years as companies look to reduce net emissions. But these programs have come under public scrutiny because of reports that have cast doubt on whether the credits deliver the intended levels of emissions reductions. Claims of “double counting” by some companies have further tarnished the program’s reputation.

The new Voluntary Carbon Market Joint Policy Statements and Principles were announced by Treasury Secretary Janet Yellen, Energy Secretary Jennifer Granholm, Department of Agriculture Secretary Tom Vilsack, and senior White House advisers John Podesta, Ali Zaidi, and Lael Brainard.

The new federal guidelines seek to advance responsible market practices around VCMs — accelerating progress on net-zero emissions and incentivizing new clean energy deployment in other parts of the world, senior administration officials said Tuesday.

The rules seek to standardize the types of projects funded by the offset credits to ensure they deliver “real and quantifiable” emissions reductions and ones that would not have occurred otherwise, officials said. In addition, they require that companies looking to purchase VCMs must first have prioritized decarbonizing their own supply chains.

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“These markets have the potential to create economic opportunity and can be a useful tool in tackling climate change, but only if further action is taken to address these challenges,” they said in a statement.

Though new VCM purchases dropped to their lowest point in seven years in 2023, some analysts have predicted the trend will reverse, including Morgan Stanley, which projects that voluntary carbon credit markets will grow to $250 billion by 2050.