The same day that FASB agreed on accounting standards updates for carbon offsets and credits, GAO issued a report Carbon Credits: Limited Federal Role in Voluntary Carbon Markets.
While FASB’s action makes clear that federal accounting standards do apply to offsets and credits (environmental credit obligations, or ECOs), GAO’s findings are less certain on how the government can – or should – regulate the market itself to “promote integrity.” GAO determined there are four themes that are potentially workable here:
- Promote transparency.
- Counter fraud.
- Protect consumers.
- Regulate quality.
One thing I found a little unclear – GAO discusses carbon “credits” rather than “offsets” without explaining the difference. Typically, credits are an emissions compliance mechanism – not voluntary, while offsets are purely voluntary.
If you were hoping for something new or exciting – sorry. These are well-known failure points in the current voluntary markets that must be remedied. It is anyone’s guess as to whether GAO’s findings will move off the paper (I’m not particularly optimistic).
On the other hand, if you are looking for a generally good, simple and clear discussion of carbon market solutions, take a look at this document which even includes a table of roles federal agencies have had in voluntary carbon markets up to March 2025.
Members can read more about carbon management here.
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