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CFTC advisory committee to examine carbon market design

15 September 2021

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The US Commodity Futures Trading Commission held a meeting of its Energy and Environmental Markets Advisory Committee (EEMAC) on 15 September via teleconference. 

During the meeting, members of EEMAC voted to recommend that the CFTC approve the formation of a subcommittee to provide a report to EEMAC on guiding principles for the design of the derivatives and underlying cash markets for environmental products, such as carbon allowances and offsets.

In his opening statement, Commissioner Dan Berkovitz, sponsor of EEMAC, emphasized that “derivatives markets, and particularly those for carbon allowances and offsets, have an important role to play in achieving [carbon] reductions. They can help companies optimize emission reductions, protect against the financial risks associated with global climate change, and manage the risks arising from the transition to a carbon-neutral economy.”

Acting Chair Rostin Behnam commented that the formation of this subcommittee is an important project that the CFTC is committed to shepherding forward “over the next couple of months as this issue is greatly important to the markets and the safety of the globe.”

During the question-and-answer portion of the meeting, several members and associate members of EEMAC posed questions and voiced concerns about the scope of the report that would be developed by the subcommittee.

Commissioner Dawn Stump encouraged the subcommittee to provide recommendations to the commission about environmental markets regulated by the CFTC, rather than focusing on bigger picture issues, beyond the scope of the Commission.    

In response to questions about the scope of the report, Abigail Knauff, the EEMAC Secretary, commented that it is up to the subcommittee, when it is ultimately formed and meets, to determine the exact content that will be included in this report. Nothing regarding scope of the report or topics consider were determined during the meeting.

CFTC to Seek Nominations for Members of the New EEMAC Subcommittee

Commissioner Berkovitz stated that the CFTC will publish a request in the Federal Register for subcommittee nominations and would strive to form a subcommittee “comprised with a broad and diverse range of viewpoints” and would not be limited to those who are already members or associate numbers of EEMAC.

Official statements and documents

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