Integrity problems, misaligned incentives, and market failures have harmed the credibility and effectiveness of project-based carbon credits as a tool for addressing climate change. Future federal regulation could help address these problems. But since no federal agency currently has comprehensive authority to regulate carbon credits, Congress would need to pass a new statute empowering an agency to fulfill this role. This report examines which federal agency or agencies would be competent to regulate carbon credits in the United States. It concludes that the Environmental Protection Agency and the Department of Energy are both reasonable choices, given their missions, technical expertise, and experience administering other regulatory programs.
This is a Brookings Institution report with contributions from authors at the Institute for Policy Integrity. In May 2026, the Brookings Institution hosted a panel dicussion featuring our Erin Shortell that presented some of the views in the report.