US regulators will propose the first federal guidelines for voluntary carbon credit derivatives, as Washington tries to bring order to a market for the offset of emissions described as the “wild west”.
The Commodity Futures Trading Commission will announce on Monday standards that call on exchanges to verify the quality of voluntary carbon credit derivatives, which base their prices on those of financial instruments bought by companies to offset emissions.
The value of the carbon trading market worldwide could expand to $100bn by 2030, up from $2bn in 2022, according to Morgan Stanley. The fledgling voluntary carbon derivatives sector, meanwhile, includes just three contracts with meaningful trading volume, while 15 more are listed but have limited trading, according to the CFTC.