Updates for the period ending April 30, 2017


 

CA Compliance Offset Pricing
CCO 8s Bid 10.20 Ask 11.00
CCO 8s are ARB-issued offsets available for spot delivery and subject to 8 years during which they may be invalidated.
CCO 3s Bid 10.95 Ask 11.60
CCO 3s are ARB-issued offsets available for spot delivery and subject to 3 years during which they may be invalidated.  The reduction to 3 years is achieved by having a different verifier successfully verify the project the following year.
CA Compliance Allowances Bid 14.35 Ask 14.39
Allowances are the permits entities purchase to emit in CA.  Entities can substitute offsets for up to 8% of their total emissions.
CA Floor Price 2017 13.57  
The minimum price at which entities can purchase allowances in 2017.
Estimated CA floor price 2018 14.52  

Allowances are the permits entities purchase to emit in CA.  Entities can substitute offsets for up to 8% of their total (The minimum price at which entities can purchase allowances in 2018 increases by 5% annually plus CPI-U.

(Bid/Ask Prices are taken from multiple broker quotes for the period ended April 30, 2017. 2017 CA Floor price is the regulatory minimum auction price for allowances.  2018 estimate is based on regulatory rules and ClimeCo’s assumption of inflation in 2017 as measured by the CPI-U index.  Green numbers indicate positive changes during the month, red numbers indicate negative changes during the month, black numbers are unchanged.)

 

Offset Supply Information:
  • All CCOs issued to date: 57.60 million
  • Compliance credits awaiting issuance: 27.07 million
CA and General Market Commentary:
  • The current Cap and Trade program in California is authorized through 2020. The CA legislature is seeking to extend the authorization and to provide certainty about the program, but recent proposals have provided anything but certainty to the market.
  • Three competing bills, AB378, AB151, and SB775 have been proposed by California legislators. Each bill addresses some element of the CA Cap and Trade program, and the three bills appear to be mutually exclusive to some extent.
  • SB775 would authorize a new Cap and Trade program starting in 2021. This program would be a complete re-start, with no banking allowances from the current program, no offsets, and a very limited trading component- the bill might be more aptly called a Cap and Tax program.
  • AB378 continues the current Cap and Trade program, but imposes severe limits on emissions at facilities in disadvantaged communities in CA.
  • AB151 focuses on job dislocation and training and on encouraging offset projects inside disadvantaged communities in CA.
  • We will be watching political developments in California very carefully, and will continue to advocate for a sensible, market-based program with flexibility that leverages the many benefits of offset projects.


Questions?

Contact Derek Six, Senior Vice President of ClimeCo Corporation dsix@climeco.com or call 484.415.0501