A federal attempt to foster ‘high-integrity’ carbon credits falls short, experts say

After two years of public meetings and consultations, the Commodity Futures Trading Commission (CFTC) recently issued final guidance on derivatives trading based on carbon credits. The guidance aims to address concerns about fraud in the carbon credit market. Despite CFTC Chair Rostin Behnam calling it a critical step, experts and environmental groups remain skeptical. They argue that the guidance’s limited reach may not make a significant impact and could inadvertently legitimize questionable carbon credits. The CFTC’s role in regulating carbon credits remains unclear, as experts believe the agency should take a more proactive approach to address concerns about the integrity of voluntary carbon markets. This guidance, while not legally binding, may not go far enough to prevent fraud in the market.