CFTC investigators have requested documents on carbon projects the agency considers potentially troublesome, according to a person familiar with the effort who was granted anonymity. As outlined, the remit covers credits for remediating aging, abandoned oil wells - often called orphan wells - as well as credits aimed at cutting emissions from deforestation and forest degradation.
Investigators are concentrating on major U.S.-based carbon credit registries, the organizations that handle validation and certification, and the independent firms that rate credits. Officials also plan to obtain additional information through appropriate international bodies. The examination is pulling in leads the commission had already received, including under prior administrations. Which specific companies or projects were sent the requests was not immediately known.
This market swelled as companies announced climate goals, then cooled as concerns mounted over credit quality and as some corporations retreated from climate commitments. Bloomberg reported in August, citing BloombergNEF, that issuance of voluntary carbon offsets was down 12% in the prior year compared with the 2021 high, reflecting greenwashing worries and weaker corporate demand.
The CFTC brought its first enforcement action alleging fraud in this market in 2024. Companies purchase credits to balance out their own emissions by funding reductions elsewhere. Supporters see these programs as a tool against climate change, while critics say they can serve as greenwashing with thin track records.
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If the review uncovers real problems, it could ripple through the ecosystem that originates, verifies, sells or rates credits. If it bolsters confidence, activity could stabilize. Either way, it is worth watching any exposure to voluntary carbon projects or the companies that service them, because reputation and regulation can shift quickly in markets built on trust.
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