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USDA and exchanges say standards, verification and farmer economics must improve for robust voluntary carbon markets
Summary
CFTC, USDA and market participants at ADcon discussed voluntary carbon credits, the need for clear protocols and standards, USDAs Growing Climate Solutions Act implementation, and how exchanges might list derivatives once credible spot references and registry processes exist.
Industry, regulators and USDA officials at ADcon outlined the central obstacles to creating a liquid, trusted voluntary carbon-credit market and the role derivatives might play once the spot market matures.
Panelists said demand is driven largely by corporations seeking to address "hard-to-abate" emissions after measuring and reducing what they can. But sellers (farmers, foresters) and buyers need clarity on protocol integrity, measurement and permanence. Sean from USDA described public steps under the Growing Climate Solutions Act—certifying verifiers and technical-assistance providers, publishing lists of workable protocols, and funding soil-sampling networks and small-landowner aggregation grants to lower transaction costs.
Exchange and registry representatives stressed that derivatives require clear, auditable reference prices and delivery definitions. Nori and other platform participants said attributes of deliverable credits (type, vintage, permanence assumptions and verification standard) must be specified so a DCM can design a settle-to index or deliverable instrument. Panelists pointed to emerging global standards (ICVCM, IOSCO engagement) as helpful reference points.
Whats next: USDA will continue protocol reviews and rollout of assistance programs; CFTC staff is reviewing public comments on its non-binding guidance on voluntary-carbon derivatives and intends to finalize guidance for Commission consideration.
