In a significant move to stabilise the carbon credit market, the US Commodity Futures Trading Commission (CFTC) has introduced the first federal guidelines for unregulated carbon offsets. This step, backed by the Biden administration, aims to standardise the market and support nature conservation more effectively.
View from below of a massive sequoia tree. AI generated picture.
The new measures, finalised at the end of September, require exchanges to validate carbon offset derivatives, which are financial instruments used by companies to offset their emissions. These guidelines are seen as essential in promoting the integrity of carbon credits, ensuring better liquidity and price transparency, according to Treasury Secretary Janet Yellen.
Read more: Verra updates soil carbon methodology for clearer reporting
The carbon credit market, which could expand to $100 billion by 2030, has faced credibility challenges, leading to limited trading volume in voluntary carbon derivatives. CFTC Chair Rostin Behnam emphasised the agency's responsibility to ensure the health and transparency of both the derivatives market and the underlying cash market.
The guidelines, first proposed in December 2023, aim to prevent market manipulation and price distortions by pushing for compliance with CFTC regulations and US law. This move is part of a broader political strategy by the Biden administration to attract private investment into renewable energy and conservation through credible carbon credits.
Read more: DGB’s Impact Loans, revolutionising responsible investing
Despite the positive momentum, Behnam warned that the transition to renewable energy would take decades, underlining the gradual shift from carbon-based energy sources. The guidelines emphasise the importance of project integrity, including avoiding ‘double-counting’ of carbon credits.
Mark Carney, UN Special Envoy on Climate Action, praised the CFTC's initiative, urging other global regulators to follow suit in professionalising and scaling voluntary carbon markets.
At DGB Group, we advocate for clear regulations to strengthen carbon markets, ensuring businesses and individuals can effectively progress toward their net-zero goals. By supporting robust standards and regulatory frameworks, we enhance the integrity and transparency of carbon credits, fostering confidence in nature-based solutions.
Our projects, which include reforestation, afforestation, community-driven agroforestry, and sustainable land management, produce high-quality carbon units verified by leading standards such as Verra and the Gold Standard. Through DGB's carbon compensation solutions, we provide organisations with a reliable and impactful way to reduce their environmental footprint and contribute to the planet's long-term sustainability.
Explore DGB’s nature-based solutions
