Leading derivatives marketplace CME Group announced that it will launch a Global Emissions Offset (GEO) futures contract, aiming to provide customers with a market-based solution to manage global emissions risk. Jointly developed with commodity marketplace provider Xpansiv’s CBL market, the contract is expected to launch on March 1, 2021, pending regulatory reviews.
CME Group is a member of the Taskforce on Scaling Voluntary Carbon Markets, a private sector-led voluntary carbon market initiative. The taskforce has published recommendations around the need for a physically-delivered futures market in order to achieve a more robust and transparent voluntary offset market.
Peter Keavey, Global Head of Energy at CME Group, said:
“Demand for voluntary carbon offsets is growing around the world as more countries and companies take action toward creating a lower carbon economy. GEO futures will provide a regulated, market-based solution that can help address risk management needs for near-term emissions reduction strategies, as well as a standardized pricing benchmark to help facilitate long-term climate goals.”
The GEO is designed to enable the market to effectively set a price on carbon based on real-time transactions of carefully vetted offset projects, based on parameters defined by the International Civil Aviation Organization (ICAO) for CORSIA—the Carbon Offsetting and Reduction Scheme for International Aviation. The GEO is aimed at scaling the global voluntary carbon market, by standardizing and streamlining the purchase of offsets, and will allow for delivery of CORSIA eligible voluntary offset credits from three ICAO approved registries. The announcement follows the launch in September 2020 of the GEO contract on the CBL Markets Exchange.
Xpansiv Chief Strategy Officer Nathan Rockliff said:
“After a decade building the largest voluntary carbon market in the world, it’s remarkable to witness this watershed moment. We’ve worked closely with myriad stakeholders—corporates, project developers, trading firms, airlines, and leading standards like VERRA, CAR, ACR—to develop the GEO, the first standardized contract for carbon offsets across multiple project types and geographies. The GEO helps to establish a global price for the voluntary carbon market based on offsets vetted by a multi-year process, and with this landmark futures contract, CME Group and Xpansiv provide a clear path to action for net-zero commitments.”