Federal regulators moved one step closer last week toward finalizing guidelines that are meant to curb fraud in the derivatives markets where voluntary carbon credits are traded.
The Commodity Futures Trading Commission on Friday ended its public comment on the proposed guidance, which the agency unveiled in December. The proposal targets “designated contract markets” with listed climate-related contracts.
unveiled in December
The guidance wouldn’t carry the same weight as a regulation. But it’s designed to encourage derivatives markets to verify that climate-related derivatives are based on credits that permanently deliver emissions reductions by financing projects that otherwise would struggle to attract investment.
The public comment period drew input from green groups, trade associations, carbon market registries and more. Many welcomed the agency’s attention to the issue due to prevailing concerns that many carbon credits do not deliver the emissions reductions they promise, and that they can provide companies with cover to continue polluting.
