N-GEO Futures – A Natural Solution

  • 21 Jun 2021
  • By Russell Karas and Chad Britnell
  • Topics: Energy


The movement to mitigate climate change seems to accelerate more each day. While businesses, governments, and institutions grapple with how to transition to more sustainable practices, one thing is clear – there’s no silver bullet in this market evolution. Immediate steps must be taken, near term actions must be planned for, and long-term solutions must be innovated and scaled. Offsets from emissions reduction projects will play an important role in every stage of this transition. While offset project types and technologies will evolve over time, Agriculture, Forestry and Other Land Use (AFOLU) projects will play a vital role throughout the development curve.

Like any other offset subsector, AFOLU or nature-based credits have historically been traded in opaque and decentralized markets. Just like the Global Emissions Offset (GEO) futures contract standardized CORSIA-eligible offsets, the CBL Nature Based Global Emissions Offset (N-GEO) contract will lead to a more efficient and transparent market for AFOLU credits. The contract will follow the industry-leading Verified Carbon (VCS) Standard and require additional certification of Verra Registry’s stringent Climate Community and Biodiversity (CCB) Standard.

Why Nature Based

Thirty percent of global greenhouse gas (GHG) emissions are caused by forest destruction and poor agricultural practices. The protection and restoration of natural ecosystems will play an important role in limiting global warming to below 1.5°C, while bringing additional environmental and social benefits. Nature-based solutions are projects which protect, transform or restore land. In this way, nature absorbs more CO2 emissions from the atmosphere1. Boosting carbon sequestration in the Agriculture, Forestry and Other Land Use (AFOLU) sector is an effective approach to reduce and remove emissions. Activities such as afforestation, reforestation, revegetation, wetland rewetting and conservation, reducing emissions from deforestation, and improved forestry management fall under the AFOLU project category and are impactful carbon sequestration practices2. AFOLU projects can lead to the marketing, trading, and sale of carbon offsets. Demand amongst corporate entities and governments for nature-based offsets as a climate mitigation tool has grown substantially over the years.

Figure 1. Number of Carbon Offset Mentions in 10-k Filings

Source: Particle.One

In 2019, Forestry and Land Use voluntary carbon offset volume reached nearly 37 million mt CO2e, valued at $159.1M. Offsets stemming from AFOLU projects accounted for over 56% of the voluntary offset market in 2019.

Figure 2. 2019 Voluntary Carbon Offset Price and Volume 3

Average Price Value
Renewable Energy 42.2 $1.4 $60.1M
Forestry and Land Use 36.7 $4.3 $159.1M
Waste Disposal 7.3 $2.5 $18.0M
Household Devices 6.4 $3.8 $24.8M
Chemical Processes/Industrial Manufactoring 4.1 $1.9 $7.7M
Energy Efficiency/Fuel Switching 3.1 $3.9 $11.9M
Transportation 0.4 $1.7 $0.7M

Forestry and Land Use offsets ranked first and second amongst types of offsets purchased in 2019 by European and North American buyers respectively. Voluntary offset projects and associated credits allow firms to take near term action to meet carbon reduction goals while they work to transition to low-carbon business practices.

Figure 3. Prices & Volume by Project Category (European Buyers, 2019) 4

Figure 4. Prices & Volume by Project Category (North American Buyers, 2019) 5

Verra + CCB Overview

Verra is a non-profit organization founded in 2005 that focuses on developing standards and frameworks that help global entities achieve ambitious sustainable development and climate action goals. Verra also operates Verra Registry, which facilitates the transparent listing of information on certified projects, issued and retired units, and enables the trading of units. It is the central repository for all information and documentation relating to Verra projects and credits. The Verra Registry also ensures the uniqueness of projects and credits in the system6.

Verified Carbon Standard (VCS) is Verra’s flagship voluntary GHG program. Over 1,600 certified VCS projects have collectively reduced or removed more than 500 million tonnes of carbon and other GHG emissions from the atmosphere. VCS leads the way in developing frameworks to unlock the carbon reduction power of AFOLU projects7. The Verified Carbon Standard was among the first global standards to develop robust requirements for crediting AFOLU projects. All AFOLU requirements have been developed in collaboration with the VCS AFOLU Steering Committee and other working groups of leading international forest and agriculture experts, such as the Environmental Defense Fund and The Nature Conservancy. In just a few short years, VCS has become the most widely used standard in the sector8.

Verra also offers a program called the Climate, Community, & Biodiversity (CCB) Standards that identifies projects that simultaneously address climate change, support local communities and smallholders, and conserve biodiversity. The CCB Standards can be applied to any land management project, including projects under the VCS Program, to certify such climate, community, and biodiversity benefits9. In order to receive this additional attribute for an emission reduction project, developers must undergo an independent audit and verification process. The local community also has the ability to comment on the project during each audit. The CCB Program is beneficial for a variety of users including project developers, local communities, project investors, offset buyers, and governments. For some market participants, one or more CCB labels associated with an offset credit provides additional value to the underlying project and may be reflected positively in related offset pricing.

Figure 5. AFOLU Standards - Market Share 10

CBL N-GEO Futures Overview

As the result of market demand, CBL markets has developed a spot contract that targets voluntary offsets in the nature-based carbon emissions market, specifically those that come from VCS AFOLU projects with a CCB label. CME Group is planning to launch a futures contract based on the specifications and offset selection criteria of the CBL Nature-Based Global Emissions Offset Spot contract. Nature-Based emissions projects include and are specific to AFOLU projects. Ownership of emissions offsets earned or generated through AFOLU projects is tracked in carbon offset registries. CBL Markets has made Verra Registry the sole carbon offset registry for the delivery and storage of N-GEO eligible offsets. Under CBL’s Standard Instruments Program, which defines a screening methodology, defining criteria, and list of approved registries, offsets meeting the following N-GEO Screen Criteria are eligible to be delivered against the N-GEO contract11:

  1. VCS AFOLU Project: An Approved Registry project qualifying and verified under the Verra Registry Agriculture, Forestry and Other Land Use (AFOLU) sector program methodologies (found here): and
  2. CCB Label/Certification: Projects and Units certified and labelled under at least one Climate, Community, & Biodiversity Standards, Rules for the Use of Climate, Community, & Biodiversity Standards, Version 3 (found here)
  3. Vintage: Projects meeting criteria (1) and (2) above for Units with issuance vintages 2016-2020.

The CBL Standard Instruments Program states that the following registries are approved for delivering offsets meeting the N-GEO Screening Criteria12:

  1. Verra Registry, operated by Verified Carbon Standard (VCS)

N-GEO eligible offsets from the approved registries will be deliverable under the CBL Nature-Based Global Emissions Offset Futures contract.

Many of the attributes of the N-GEO futures contract will follow the same structure as the GEO futures contract, such as expiration date, contract size, tick size, and listed trading venues. Similar to GEO, N-GEO will utilize the underlying CBL spot data for pricing the futures and CBL’s connectivity to the Verra for delivery. Since N-GEO also includes one of the three offset registries eligible for delivery via the GEO futures contract, it should be straightforward to enable N-GEO futures for any firm that is fully setup to make or take delivery of the GEO futures. There will also be an exchange listed spread for N-GEO and GEO futures, which will allow firms to execute both legs as a spread price without any leg risk.


Market participants have come to CME and CBL in search of transparent and efficient tools to achieve ESG goals in short order. Some firms will utilize GEO futures, some will prefer nature-based offsets through N-GEO, and some will find use cases for both. There are more than 100 million offsets of supply underlying these contracts, with the ability to price an even wider range of offsets as basis to these benchmarks. With the launch of these products, there will be more options than ever for market participants to access standardized and defensible voluntary emissions offset credits through the spot and cleared futures market. This is a pivotal step on the long road toward mitigating global climate risks.


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