On 13 January 2023, Verra submitted public comments on the Request for Information (RFI) on Climate-Related Financial Risk issued by the U.S. Commodity Futures Trading Commission (CFTC). The comments are available on the CFTC website.
In Verra’s view, the VCM has delivered substantial carbon emission reductions and climate financing and is well positioned to continue to do so. Verra supports the VCM by operating the Verified Carbon Standard (VCS) Program, the world’s largest greenhouse gas crediting program, which has issued over one billion carbon credits to date. Verra ensures the integrity of these credits through the development and implementation of a comprehensive set of rules and requirements, sector-specific methodologies for emission reduction and removal activities, and a registry for tracking issuances, transfers, and retirements of credits.
Verra agrees with other RFI commenters that the CFTC can and should bring enforcement actions against fraud or manipulation in the VCM, as it does in other commodity spot markets, under its general anti-fraud and anti-manipulation statutory authority.
Verra disagrees with certain other RFI commenters who argue that the CFTC should regulate all VCM transactions through its plenary authority over derivatives. In Verra’s view, many VCM transactions are spot transactions of commodities (i.e., the sale of a carbon credit results in the delivery of a credit in exchange for payment on a specified spot date), rather than transactions of derivative instruments, and accordingly fall outside of CFTC authority to regulate.
Verra appreciates the opportunity to submit its comments to the CFTC on this important matter.