CFTC Moves to Finalize Guidelines to Combat Fraud in Voluntary Carbon Credit Derivatives Markets

The US Commodity Futures Trading Commission (CFTC) is moving towards finalizing guidelines to curb fraud in the derivatives markets where voluntary carbon credits are traded. The proposal, unveiled in December, targets “designated contract markets” with listed climate-related contracts. The guidance is designed to encourage derivatives markets to verify that these credits are based on credits that permanently deliver emissions reductions. The public comment period received input from green groups, trade associations, carbon market registries, and more. There are concerns that many carbon credits do not deliver the emissions reductions promised, and that they can provide companies with cover to continue polluting.