The US derivatives regulator is conducting a broad probe into the voluntary carbon credit market, an industry that boomed when corporations started pledging to reduce their emissions but has shrunk amid quality concerns and a wider corporate pullback on climate goals. The Commodity Futures Trading Commission’s investigators are sending out voluntary document requests related to what the agency considers potentially problematic carbon projects, said a person familiar with the probe granted anonymity to discuss internal matters. The agency scrutiny includes credits associated with cleanups of old, abandoned oil wells, also called orphan wells, and credits linked to reducing emissions from deforestation and forest degradation.

The CFTC has focused on large US-based carbon credit registries, validation and certification bodies and third-party ratings agencies, the person said. Plans are underway to seek additional information through appropriate international bodies. Companies buy carbon credits to offset their own pollution by backing emission reduction efforts elsewhere in the world.

Proponents say the programs help fight climate change while others criticize them as so-called greenwashing vehicles with thin track records. After peaking in 2021, annual issuance of voluntary carbon offsets fell 12% last year amid greenwashing allegations and less appetite from corporate buyers, Bloomberg reported in August, citing analysis by Bloomberg NEF. The CFTC took its first enforcement action for alleged fraud in the market in 2024.

The latest examination includes leads previously received by the CFTC, including under prior administrations, the person said. It was not immediately clear which firms or projects received the requests.