From voluntary crediting to public adoption

Voluntary carbon markets have historically operated through private standards and registries, where credit integrity was signaled through project-level methodologies, third-party verification, and reputational mechanisms. In these settings, eligibility rules—defining which project types and methodologies could generate credits—were largely internal to individual programs. Buyers retained discretion to undertake independent assessments beyond eligibility designations, allowing for informal differentiation based on market reputation and choice [2,17]. This pattern in voluntary carbon markets is changing. Public regimes are increasingly incorporating voluntary credits into compliance systems, public procurement, or government-endorsed claims frameworks by defining explicit eligibility criteria and, in some cases, publishing official lists of eligible programs or units. Prominent examples include the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), Japan’s mandatory emissions trading scheme (GX-ETS) beginning in 2026, and Singapore’s carbon tax framework allowing offsets of up to 5% of taxable emissions as of January 2024 [1,3,5,18,19].

The transition from voluntary crediting to public adoption represents a qualitative change in the function of eligibility. Under public adoption, eligibility is no longer merely an internal program rule but a governance designation issued by public authorities with legal and reputational consequences. Eligibility decisions made by public authorities directly shape which credits are acceptable for regulatory compliance or publicly endorsed claims, thereby influencing demand at scale. As a result, eligibility increasingly operates as a focal assurance signal—narrowing the space for informal quality differentiation and amplifying the authority of inclusion decisions. This shift also alters the informational role of eligibility. In markets characterized by information asymmetry, eligibility designations by public authorities can function as powerful signals. Unlike conventional signals of credit integrity, however, their credibility derives primarily from eligibility decisions by public authorities rather than from evidentiary and governance foundations alone. When eligibility is designed as a threshold but interpreted as a comprehensive signal of credit integrity, reliance on eligibility status can reduce scrutiny of evidentiary and governance foundations and concentrate decision-making around eligibility lists.

Public adoption further reshapes the relationship between eligibility and claims. In voluntary markets, claims were governed—albeit inconsistently—through a combination of program rules, corporate disclosure practices, and reputational scrutiny. Once credits become eligible for use in compliance settings, eligibility implicitly authorizes particular claim permissions. In regimes that rely on external crediting programs rather than issuing credits directly, authorities must assess and approve entire programs or methodologies—often developed for voluntary markets—under time, capacity, and political constraints. In addition, the use of credits to meet compliance obligations linked to Nationally Determined Contributions (NDCs) makes the relationship between credit retirement and national accounting increasingly important [2,12,13,20].

The incorporation of voluntary credits into public regimes creates two structural tensions. The first is a tension between integrity and scale. Public adoption is often motivated by the desire to mobilize large volumes of mitigation at relatively low cost, yet eligibility decisions that prioritize scalability and administrative feasibility can weaken incentives for conservatism in baseline setting, additionality assessment, and permanence management [6,10]. The second is a tension between eligibility designations and the evidentiary and governance foundations supporting claims of credit integrity [1]. Carbon dioxide removal (CDR) credits illustrate both tensions particularly clearly, although the underlying challenges are not unique to removals. Scaling CDR often requires eligibility decisions to be made under conditions of limited evidence, evolving methodologies, and significant uncertainty, creating potential trade-offs between integrity and deployment. At the same time, durability assumptions and long-time horizons can make the evidentiary and governance foundations supporting claims of credit integrity especially difficult to assess, increasing the risk that eligibility designations are interpreted as stronger assurance signals than those foundations warrant [21–23]. Similar challenges arise in emission-reduction activities subject to uncertainty regarding additionality, quantification, permanence, or monitoring [12,24].

Viewed in combination, the transition from voluntary crediting to public adoption reshapes eligibility from a program-level filter into a central governance instrument, creating conditions under which eligibility signals may be interpreted as assurance of credit integrity. Recognizing this shift is essential for designing frameworks that maintain alignment between eligibility-based assurance signals and the evidentiary and governance foundations supporting claims of credit integrity.

Observable implications of trust inflation

Trust inflation is not directly observable; however, it may generate observable implications across multiple domains relevant to eligibility governance. Box 1 provides illustrative cases from compliance, international aviation, and voluntary market governance, showing how eligibility designations have been interpreted as assurance and subsequently contested. Motivated by these examples, Table 1 summarizes illustrative observations associated with trust inflation. These observations span market behavior, claims practices, information use and scrutiny, and responses to integrity concerns, reflecting the multiple pathways through which eligibility-based assurance signals may influence governance outcomes. If eligibility increasingly substitutes for independent assessment, demand may become concentrated on eligible credits regardless of differences in evidentiary and governance foundations. Market differentiation may become less responsive to evidentiary and governance foundations, potentially reducing incentives to reward credits supported by stronger foundations. Baseline-and-credit systems are particularly vulnerable because credit issuance depends on counterfactual baselines and assumptions about additionality [7,10]. Under such conditions, lower-integrity supply may expand while higher-integrity alternatives are disadvantaged, contributing to adverse selection [6,10,11]. These dynamics are illustrative rather than deterministic and may vary across contexts.

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Table 1. Illustrative observations for assessing trust inflation.

https://doi.org/10.1371/journal.pclm.0001001.t001

Trust inflation can operate simultaneously at multiple levels. At the level of units, eligibility determines which credits may be used in compliance or procurement. At the level of claims, eligibility shapes which forms of credit use and associated claims are treated as acceptable. When eligibility is interpreted as assurance, both dimensions can reinforce one another, increasing the risk that eligibility status substitutes for independent assessment of evidentiary and governance foundations.

The framework would be weakened if eligibility-based systems consistently exhibited strong differentiation according to evidentiary and governance foundations, sustained use of independent assessments beyond eligibility designations, and significant market reassessment following integrity controversies despite widespread reliance on eligibility designations. Such observations would suggest that eligibility is not functioning as a substitute for assessment and that assurance signals remain closely aligned with their supporting foundations.

Three reasons why criteria tightening is often insufficient

Calls to strengthen integrity in carbon credit markets often focus on tightening technical criteria—such as more conservative baselines, stricter additionality tests, enhanced monitoring, reporting and verification (MRV) protocols, and more stringent permanence requirements [13–15]. These reforms are necessary and, in many cases, overdue. However, evidence from both compliance and voluntary settings suggests that criteria tightening alone is frequently insufficient to address integrity risks [6,7,9]. Trust inflation can persist because technical criteria are implemented within governance systems shaped by political-economy pressures, capacity constraints, and misaligned verification incentives. In this sense, the binding constraints are often found in eligibility governance rather than in criteria design alone [7,9,16,30]. Three interrelated reasons help explain why.

First, baseline-and-credit systems are subject to political-economy dynamics that systematically favor credit expansion over conservatism. Multiple actors benefit from looser rules: project developers benefit from higher issuance volumes, buyers benefit from greater supply and lower prices, and host governments may benefit from increased credit generation and associated revenues. Stakeholders advocating for stricter integrity safeguards often face collective-action disadvantages—because the benefits of higher integrity are diffuse while the costs of stricter rules are concentrated—as well as weaker leverage. Over time, these dynamics can lead to rule drift toward flexibility, especially where market growth, liquidity, or political acceptability are prioritized [1,7,9]. Criteria that appear stringent on paper may thus be softened in interpretation, application, or revision.

Second, even when criteria are tightened, verification and oversight arrangements can undermine their practical effect. Verification serves as a gatekeeping function, yet most carbon crediting systems rely on “client-pays” auditing models in which project developers or intermediaries select and remunerate verifiers. This structure creates incentives for leniency, auditor shopping, and procedural compliance, patterns well documented in audit governance more broadly [15,31,32]. Carbon markets add a distinctive vulnerability; verification is not limited to checking accounting accuracy but requires adjudicating counterfactual claims about baselines and additionality that are inherently contestable. As a result, tighter criteria may shift verification practices toward documentation-based compliance rather than substantive scrutiny, allowing trust inflation to persist despite stronger criteria [6,7,9].

Third, criteria tightening can inadvertently reinforce trust inflation when oversight capacity does not keep pace with increasingly complex eligibility systems. Where monitoring, verification, and accounting systems remain fragmented or unevenly applied, eligibility-based assurance signals may substitute for consistent scrutiny. Evidence from emerging regulatory contexts suggests that MRV standards and accounting conventions remain heterogeneous, and that additionality assessments are often complex, subjective, and resource-intensive [33]. Under such conditions, eligibility designations can convey stronger assurance regarding credit integrity than available oversight capacity can support.

The policy response: Tiered eligibility and audit-governance arrangements

Given that political-economy pressures in carbon credit markets cannot be eliminated, the objective of reform is not to guarantee credit integrity, but to reduce the likelihood that eligibility designations are interpreted as assurance exceeding the evidentiary and governance foundations supporting claims of credit integrity. Effective eligibility governance works by increasing the detectability of integrity failures and introducing countervailing checks on pressures that favor credit expansion. These interventions are best understood as robustness measures designed to constrain trust inflation rather than as mechanisms capable of ensuring integrity under all conditions [1,7]. Where eligibility functions as an assurance signal, outcomes depend less on the existence of criteria alone than on the governance arrangements that determines how criteria are implemented, reviewed, and translated into claim permissions [9,16,30,34]. Two complementary governance responses are particularly important: strengthening audit-governance arrangements and adopting tiered eligibility frameworks.

First, eligibility is unlikely to be robust when implemented as a binary designation. Binary inclusion signals are easily misinterpreted as assurance, especially in regulated contexts. While non-binary approaches can take several forms—including scoring systems, conditional use rules, or weighting—tiered eligibility offers a pragmatic public interface for aligning evidentiary strength, governance requirements, and permissible claims. In a tiered framework, eligibility is differentiated into a small number of clearly defined tiers, each explicitly linked to distinct claim permissions, thereby ensuring that tier—not mere inclusion—serves as the primary assurance signal [1,15]. For example, a lower tier could permit restricted contribution-style claims where evidentiary or governance foundations remain incomplete. An intermediate tier could permit limited use in compliance or procurement settings with clear disclosure of uncertainty and claim limitations. A higher tier could support stronger compensatory or offset-like claims only where evidentiary foundations, governance safeguards, and accounting alignment are correspondingly robust.

To remain effective, tiered systems must balance differentiation with legibility. Proliferation of tiers or divergence across parallel regimes can undermine transparency and create opportunities for regulatory arbitrage. Tiers are therefore most robust when they are few in number (for example, three), defined by stable cross-cutting dimensions such as evidentiary strength, durability, and accounting alignment, and implemented through a single public interface that displays tier assignment, claim permissions, and key parameters in standardized form. Under such conditions, tiering can reduce the risk that eligibility is interpreted as assurance exceeding the evidentiary and governance foundations supporting claims of credit integrity.

Second, audit-governance arrangements must address the mechanisms through which contested claims are assessed, verified, and ultimately converted into tradable units. Client-pays auditing models can incentivize leniency, and repeated contracting relationships can reward reduced scrutiny over time [9,16]. Recent critiques have argued that auditing alone cannot reliably resolve fundamental integrity challenges where underlying assumptions remain contested [35]. Strengthening criteria without addressing these verification incentives risks reinforcing procedural compliance while leaving underlying evidentiary uncertainties unresolved. Therefore, robust audit-governance arrangements require measures that decouple verification from project developers’ procurement power, strengthen oversight and appeal mechanisms, and mandate transparency sufficient to enable external scrutiny. These measures do not eliminate incentive problems, but they can raise the cost of leniency and increase the likelihood that integrity failures are detected and contested [13,34].

Box 2 summarizes the proposed audit-governance arrangements, while Table 2 maps the associated responsibilities across key actors within eligibility-based governance systems. The framework does not assume that a single actor manages the entire system; rather, governance responsibilities are distributed across eligibility-setting authorities, crediting programs, registries, verifiers, oversight bodies, buyers, host governments, and external scrutiny actors. Tier assignment itself is subject to political-economy pressure and cannot be assumed neutral. To remain credible, tiering must be rule-bound and auditable. Decision rationales and key parameters should be disclosed by default, periodic external review should be mandatory, and discretionary upgrades should be constrained through transparent criteria and clearly defined challenge and appeal procedures [13,15].

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Table 2. Illustrative governance measures for reducing trust inflation in eligibility-based carbon credit systems.

https://doi.org/10.1371/journal.pclm.0001001.t002