CME Group to Introduce a Global Emissions Offset (GEO) Futures Contract

CME Group, a US-based derivatives market operator with industry-leading position, will launch a Global Emissions Offset (GEO) futures contract which was jointly developed by CME Group and spot energy and environmental markets giant Xpansiv market CBL on 1 March 2021, subject to regulatory approvals. The new contract will provide investors with a market-based solution to manage global emissions risk. 

According to Nathan Rockliff, Chief Strategy Officer of Xpansiv, the contract is the first standardized contract for carbon offsets across many project types and geographies. With this landmark futures contract, CME Group and Xpansiv offer a clear way to actions that can be taken for net-zero commitments.

Voluntary offsets give businesses the opportunity to purchase credits to help reduce their overall carbon footprint as they work to transition to a more sustainable business growth model. Trading volume in the voluntary carbon offset market is currently around $320 million and the figure is expected to grow with increasing demand for global decarbonization and standardized climate hedging strategies.  

The GEO futures contract is based on the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). CORSIA includes globally recognized carbon offset standards based on a series of rigorous criteria developed by the International Civil Aviation Organization (ICAO), a specialized agency of the United Nations.

The futures which will allow CORSIA eligible voluntary offset credits to be delivered from three ICAO approved registries will be listed by and subject to the rules of NYMEX.