The Global Emissions Offset futures (GEO) contract is a physically settled contract that allows for delivery of CORSIA eligible voluntary carbon offset credits from three registries: Verified Carbon Standard (VCS), American Carbon Registry (ACR), and Climate Action Reserve (CAR). Deliveries will be facilitated through CBL, a global leader in spot energy and environmental markets.
Please see the Global Emissions Offset futures contract specifications for more information.
CME Group’s global customers are in search of a way to manage future price risk associated with carbon markets across regions. The GEO contract enables increased price transparency for voluntary carbon offsets in future months and provides a mechanism for convergence across different carbon registries and project types.
Carbon offset credits are generated from projects that lead to offsets in emissions behind business as usual practices. Offset credits provide a flexible way to meet certain compliance obligations for state or regional carbon reduction schemes or to voluntarily reduce emissions at the state, corporate, or individual level. Offset projects and credits also bridge the gap between emissions reductions across countries and industries. They are especially useful in the early stages of reduction efforts in compliance programs or voluntary efforts, while long-term low carbon business practices are developed.
Xpansiv company CBL provides access to the world’s energy and environmental commodity markets, facilitating the secure and seamless trading of commodities like carbon, renewable energy, water, and gas. Join CBL at cblmarkets.com.
The International Civil Aviation Organization (ICAO), a UN specialized agency, adopted the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) as a market-based mechanism to meet an ambitious goal of carbon neutral growth from international aviation beyond 2020. The ICAO has approved seven voluntary carbon offset registries that airlines can use to comply with CORSIA; three of which are included in the futures contract.
Please see the link below for more information on CORSIA:
CME Group and CBL chose the three CORSIA eligible registries based on a variety of a criteria including access to credits and the ability to resell credits under the programs.
Please see the links below for more information on each eligible registry:
Verified Carbon Standard (VCS) applicant:
Please register for VCS here: https://registry.verra.org/mymodule/reg/AHAgreement.asp
Upon receipt of the email instructions for submitting the required documentation, please provide the following to Verra VCS to facilitate the remainder of your registration:
Climate Action Reserve (CAR) applicant:
Please register for CAR here: https://thereserve2.apx.com/mymodule/reg/AHAgreement.asp
Upon receipt of the email instructions for submitting the required documentation, please provide the following to CAR to facilitate the remainder of your registration:
Please note that all documents submitted in a language other than English must be accompanied by a certified English translation. All information provided will be treated as strictly privileged and confidential. The Reserve maintains the right to request further information and documentation from your organization.
American Carbon Registry (ACR) applicant:
Please register for ACR here: https://acr2.apx.com/mymodule/mypage.asp
Upon receipt of the email instructions for submitting the required documentation, please provide the following to ACR to facilitate the remainder of your registration:
Further details can be found in the Instructions for Opening a New ACR Account document.
The ICAO has outlined specific criteria for how it qualifies registries and projects to comply with CORISA and specifics on which registries and project types are approved to date. Note that the ICAO has a rolling application process for new registries and project types. CME Group will continue to monitor additions to the ICAO list of approved offset providers and projects and may enable additional registries and projects to deliver into the GEO contract over time. Advanced notice will be provided to the market ahead of such action.
While CORSIA sets the foundation for the GEO contract, carbon offsets that fall under this program should appeal to a wide range of firms that are looking to reduce carbon emissions in a meaningful way. The criteria for CORSIA was chosen as it was established for over four years and verified through a standardized process under UN guidance.
The GEO contract is a “seller’s option” contract, meaning that a firm that expires short with intent of making delivery against the futures contract selects which eligible registry it will delivery carbon offsets from. All participants that chose to make or take delivery must be registered with CBL and with the three eligible carbon registries ahead of futures expiration. Firms taking delivery will receive an offset credit from a registry and project that meets the CORSIA criteria.
There is no CBL application, but clients may register for EMA through CBL. . Applicants must provide Supplemental Evidentiary Documentation:
Each GEO-eligible registry has its own set of requirements and supplemental documents.
GEO futures can be electronically through CME Globex or cleared as block transactions via CME Clearport.
To learn about access to CME Group’s front end trading system, CME Direct, visit https://www.cmegroup.com/trading/cme-direct.html.
Futures contracts cleared with CME Group offer a host of features and capabilities such as mitigated counterparty risk, robust audit trail for compliance purposes, efficient price execution, access to a wider variety of buyers and sellers, and a transparent settlement process.
For 100 years, CME Group has been a leader in centralized clearing ‒ offering global benchmarks in the Interest Rate, Energy, Equities, Agriculture, Metals, and Foreign Exchange space. CME Group is excited to continue to leverage its experience and reputation to help advance global environmental markets.
Learn more about futures here: https://www.cmegroup.com/education/courses.html