Broekhoff advises Calyx Global and the ICVCM under paid contracts with his employer, the Stockholm Environment Institute. These organizations did not review this work prior to publication. The analysis and conclusions presented here are solely those of the authors.
This paper is part of a workstream made possible by support from Bloomberg Philanthropies. The views expressed in this report are those of its authors and do not represent the views of Bloomberg Philanthropies, their officers, or employees.
Introduction
Carbon credit markets are highly diverse. Globally, at least 24 government-administered programs, including nine in North America, allow carbon credits to be used as instruments for complying with greenhouse gas regulations (ICAP 2025). In addition, over a dozen independent programs issue carbon credits primarily for voluntary buyers, e.g., companies voluntarily pursuing “net zero” or carbon neutrality goals. Each program issues uniquely denominated credits, making for fragmented markets.
This diversity of carbon credit programs reflects diverse objectives. Government-administered carbon crediting programs are designed around specific policy priorities. Multiple U.S. states, for example, administer carbon crediting programs in conjunction with regulatory cap-and-trade systems. Within these systems, carbon credits help to contain costs—by enabling the use of low-cost mitigation options outside capped emissions sectors—while ensuring the achievement of emission reduction goals.1 They also help to channel investment into specific sectors and activities. Most programs in North America, for example, target just a handful of domestic project types, including forestry, methane capture and destruction, and industrial gas destruction (CARB, n.d.-a; Department of Ecology, n.d.; MELCCFP 2026).
Independent programs, by contrast, serve distinct segments of the voluntary market. These programs are more geographically diverse, with several programs operating globally, not just in North America. They tend to be more experimental, incorporating a wider array of project types (e.g., engineered and nature-based removals, energy efficiency, renewable energy, and agriculture and land use projects) and orienting their activities towards the preferences of corporate voluntary buyers.
Despite these differences, government and independent programs overlap in notable ways. Regulators in California and Washington state, for example, base their carbon crediting standards on those developed by independent programs like the Climate Action Reserve. Some voluntary carbon credit buyers have chosen to purchase and retire California compliance credits to offset their emissions (Lithgow 2023). And lawmakers in multiple states have sought to leverage voluntary markets to support in-state policy goals, such as funding forest management and regenerative agriculture activities (Oklahoma SB-1569 2024; Maryland SB-348 2022).
The potential for these markets to serve common purposes, both regulatory and voluntary, suggests the possibility for greater integration. While different programs serve various policy objectives and the demands of different buyers, current markets are unnecessarily fragmented in ways that make them less efficient, less transparent, and less reliable than they could be if they were built on common foundations. Registry systems underpinning carbon credit transactions, for example, are operated independently by each program and lack interoperability. Programs differ in their governance structures, legal definitions, auditing requirements, assurance mechanisms, and information security measures. Standardizing these program elements and creating a common infrastructure—including standard practices for information disclosure—could help reduce transaction costs, allow carbon credit markets to operate more efficiently, and provide a foundation for them to grow.
Further integration could be achieved through greater government support for the voluntary carbon market. Various federal and state initiatives have already sought to harness voluntary demand for carbon credits to serve specific policy objectives. These initiatives could be further expanded to create pathways for integration of independently issued credits into future regulatory frameworks. Should the U.S. government adopt a carbon fee on imported goods, for example—like the EU’s carbon border adjustment mechanism (CBAM)—carbon credits issued by independent crediting programs could serve as an off-the-shelf compliance option. To move in this direction, however, U.S. policymakers should strengthen current voluntary markets to address persistent governance and quality shortcomings and to support sustained demand.
This brief recommends specific policy approaches that could be pursued—at federal and/or state levels—to create a common infrastructure for North American carbon credit markets and support the further development of voluntary markets with an eye towards future integration.
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Authors
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Acknowledgements and disclosures
The authors acknowledge the following support for this article:
- Research: Aidan Kane
- Editorial: Nellie Liang, Chris Miller, and David Wessel
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Footnotes
- Allowing the use of carbon credits for compliance in a cap-and-trade program means that total emissions from capped sources could in some cases exceed the regulatory emissions cap (since total emissions will be equal to the total number of allowances plus any carbon credits used for compliance). In principle, however, this exceedance is offset by the mitigation achieved by carbon credit projects, such that global emissions are no higher than they would have been without the use of carbon credits. This is often referred to as maintaining the “environmental integrity” of the cap-and-trade program.
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