Booker, Whitehouse, Matsui Urge CFTC to Bolster Regulation of Voluntary Carbon Markets

WASHINGTON, D.C. - Today, U.S. Senators Cory Booker (D-NJ) and Sheldon Whitehouse (D-RI), along with Congresswoman Doris Matsui (D-CA-07), Co-Chair of the Sustainable Energy and Environment Coalition (SEEC), led colleagues in a letter to Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam, expressing strong support for CFTC's proposed guidance for voluntary carbon markets and urging the Commission to implement the final guidance as rigorously as possible.

"Like any well-functioning market, the market for voluntary carbon credits needs clear, consistent, and commonsense regulation to ensure stability, integrity, and efficient price discovery," the lawmakers wrote. "[…] we urge the CFTC to ensure that the implementation of the final guidance does not amount to a rubber stamp of existing bad practices."

A carbon credit is intended to represent one ton of carbon-dioxide pollution (or equivalent greenhouse gases) that has been removed from the atmosphere. Carbon credits can be an important tool for reducing carbon pollution and addressing the climate crisis. However, many studies have raised questions about the validity of certain voluntary carbon credits and the associated projects that produce these credits.

For voluntary carbon credits-those not associated with a regulated cap-and-trade program-there is little public oversight. That's why the CFTC has issued the proposed guidance to establish responsibilities for market participants and ensure only high-quality credits are traded through exchanges that are regulated by the Commission. The lawmakers applaud this action but also urge the CFTC to take several additional measures moving forward.

"We encourage the CFTC to vigorously implement this guidance, to use its anti-fraud and anti-manipulation enforcement authorities to the fullest extent possible, and to brief Congress on the implementation of this guidance and any relevant enforcement actions," the lawmakers continued. "Additionally, in the CFTC's ongoing efforts to strengthen the regulation of voluntary carbon credit derivatives markets, we encourage the CFTC to consider the integral role that carbon credit registries play in derivatives markets. Finally, as we consider legislative action to strengthen the regulation of voluntary carbon markets, we request that the CFTC brief the undersigned Members of Congress on if and what additional authorities are needed to safeguard the integrity of voluntary carbon credit derivatives markets."

The letter is cosigned by U.S. Senators Richard Blumenthal (D-CT) and Elizabeth Warren (D-MA), and U.S. Representatives Sean Casten (D-IL-06), Kathy Castor (D-FL-14), Jared Huffman (D-CA-02), and Ann McLane Kuster (D-NH-02).

To read the full text of the letter, click here.