With a planned new futures contract on voluntary carbon offsets, the CME Group is seeking to create a new tool for managing global carbon emissions risk.
Pending regulatory approval, the Chicago-based derivatives exchange will launch its Global Emissions Offset (GEO) futures contract on March 1.
The contract, which is based on the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), will allow for delivery of CORSIA-eligible offset credits from three approved registries. It will be listed and traded on NYMEX.
“Demand for voluntary carbon offsets is growing around the world as more countries and companies take action toward creating a lower carbon economy,” said Peter Keavey, global head of energy at CME Group, in a statement.
“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,” he added.
The new derivative was jointly developed with Xpansiv market CBL, which operates an exchange for ESG commodities, including carbon and renewable energy certificates.
“The GEO helps to establish a global price for the voluntary carbon market,” said Nathan Rockliff, chief strategy officer for Xpansiv. “With this landmark futures contract, CME Group and Xpansiv provide a clear path to action for net-zero commitments.”