Net-Zero Simplified: CBL’s VCM Benchmark Contracts

Ben Stuart is Chief Commercial Officer at Xpansiv, the global marketplace for ESG commodities. In 2009 he co-founded Sydney-based CBL (now an Xpansiv subsidiary), the leading spot exchange for trading carbon, RECs, water, and digital commodity contracts.

For more than a decade, CBL has brought efficiency, trust, and scale to the global voluntary carbon market (VCM). This was achieved by standardizing contract terms, delivery mechanisms, and the payment process. Yet it became clear in recent years that a final step was missing: How do you commoditize offsets while maintaining quality controls and individual project visibility?

VCM interest has exploded around the world. Industry-based mechanisms have gained momentum and carbon offsets have become mainstream components of holistic net-zero programs. The market is primed for evolution.  

Following months of collaboration with market pioneers—including the International Air Transport Association with whom CBL created the Aviation Carbon Exchange—CBL launched the Global Emissions Offset™. The GEO™ enables market participants to source projects defined by criteria developed for the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). The CORSIA-approved assets underpinning the GEO eliminate much of the inefficiency of trading offsets, because buyers can trust that they’re purchasing offsets with proven provenance. The GEO also provides a VCM benchmark, vastly simplifying the process of purchasing high-quality carbon credits, providing a robust price signal for tracking market activity, and giving certainty to project developers and financiers alike.

The GEO and its companion the N-GEO™—a benchmark for nature-based offsets that support biodiversity and developing communities—both provide a clear path to net-zero. Rather than sorting through hundreds of projects, customers can buy GEO and N-GEO contracts knowing they’ll receive credits based on stringent criteria.*

The GEO first traded in October 2020, and volume climbed sharply following the CME Group announcement of a GEO futures contract this year. Rapid growth was also driven by the recommendation of the influential Taskforce on Scaling Voluntary Carbon Markets (TSVCM), which recommended the development of a VCM benchmark contract, specifically referencing the GEO

CBL’s benchmarks have been well received, with more than six million mtCO2e traded this year by 50 leading market participants. The GEO has become a VCM bellwether, used by key price-reporting agencies and media to convey market activity. The emergence of the GEO as a reliable market proxy also gives financial institutions greater confidence in funding carbon projects—vital for scaling VCM.   

The GEO is also being used to create floating carbon offset contracts, where instead of setting a fixed project price, contracts are valued at a defined premium or discount to the GEO. This reference structure means buyers and sellers can lock in a basis differential driven by project attributes, with the instrument price fluctuating to track movement of the broader carbon market defined by the GEO, reducing the risk of mispricing.  

In addition to trading and risk-management uses, the GEO is being bundled with standard commodity contracts to create net-zero LNG and other offerings, such as the landmark delivery of two million barrels of “carbon-neutral oil” by Oxy Low Carbon Ventures to Reliance Industries in India, structured by Australian investment bank Macquarie Group. And in July, the Australian Stock Exchange will list a GoldZero ETF that uses the GEO to create a net-zero gold instrument.

All these emerging strategies rely on the GEO, traded on CBL’s transparent, liquid marketplace. CBL is the global VCM’s central venue for price discovery, risk transference, and speculation. Market participants include leading energy companies, airlines, and other corporates managing net-zero programs, as well as banks, trading firms, OTC brokers, and fund managers.

As of May 2021, year-to-date carbon trading volume has exceeded 36 million mtCO2e—already surpassing 2020’s record volume of 31 million mtCO2e.

CBL’s exchange provides significant benefits:

  • Ease of entry for global participants into the carbon market
  • Simplified membership process
  • Equal market access for all market participants (not credit dependent)
  • Transparent pricing and full market depth displayed on the exchange’s central limit order book
  • Participation from global companies, producers, financial institutions, and trading firms providing diverse, two-way order flow and liquidity
  • Assessed, end-of-day closing prices to accurately mark positions to market
  • Minimal counterparty credit and performance risks

CBL’s leading market position has enabled it to collaborate with world-class organizations and institutions, including the CME, IATA, and most recently the Australian Stock Exchange. In April, CBL and the ASX joined to settle a CBL-traded domestic renewable energy certificate (REC) through ASX’s Austraclear settlement infrastructure, marking ASX’s entry into the fast-growing ESG market.

CBL is a proud sponsor of CMI’s Australasian Emissions Reduction Summit 2021. We hope to see you at the event—to arrange a meeting or to follow up later, please contact We look forward to connecting with you!

The 8th Australasian Emissions Reduction Summit is supported by CBL Markets.