Voluntary carbon market derivatives: Growth, innovation & usage

Abstract

Voluntary carbon markets (VCMs) have emerged as a preferred market mechanism to support the global economy's transition to a low carbon future. Trading in carbon offset derivatives has moved into the financial mainstream with commodity exchanges now offering trading in VCM futures. This paper discusses the historical background of carbon trading, the market ecosystem of companies and organizations that provide the necessary infrastructure, and the evolution of VCM derivatives, focusing on CME Group listed instruments. The paper discusses findings that show that exchange-traded derivatives products can lead to increased standardization, transparency, and price discovery in nascent VCMs. We review academic literature published in this growing field of research and conclude by providing recommendations for areas of further market development and research.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 55 citations exist upstream.