The U.S. Commodity Futures Trading Commission (CFTC) has issued a Notice and Request for Comment on a study regarding the oversight of existing and prospective carbon markets. Although carbon markets are currently far removed from the frenzy of activity surrounding the CFTC’s rapid expansion into the over-the-counter derivatives markets, decisions made now may define how carbon and other environmental products and markets are regulated in the future.

On November 19, 2010, amid the flurry of rulemaking activity associated with implementing the many provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the U.S. Commodity Futures Trading Commission (CFTC) quietly issued a Notice and Request for Comment on a study regarding the oversight of existing and prospective carbon markets (Carbon Market Notice). The announcement came on a particularly busy day when the Commission voted to issue four other Notices or Advance Notices of Proposed Rules called for by the Dodd-Frank Act. The announcement initially received little attention, but may prove to be significant. Although carbon markets are currently far removed from the frenzy of activity surrounding the CFTC’s rapid expansion into the over-the-counter derivatives markets, decisions made now may define how carbon and other environmental products and markets are regulated in the future.