Updates for the period ending March 31, 2017


 

CA Compliance Offset Pricing
CCO 8s Bid 10.30 Ask 10.70
CCO 8s are ARB-issued offsets available for spot delivery and subject to 8 years during which they may be invalidated.
CCO 3s Bid 10.75 Ask 11.25
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 13.59 Ask 13.64
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 March 31, 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: 56.28 million
  • Compliance credits awaiting issuance: 27.07 million
CA and General Market Commentary:
  • On April 6th, the CA appeals court upheld a decision in favor of the CA Air Resources Board. The decision affirms ARB’s right to hold auctions of allowances.
  • The decision was very positive news for the market- allowances are currently (as of today, April 10th) trading for $14.30, up $0.70 from the prices shown above in the month-end chart.
  • It is widely believed that this pending lawsuit decision had stifled the market and had been a major cause of the under-subscribed auctions.
  • In other news, Ontario released the results of its first allowance auction. The Ontario auction was fully subscribed, and cleared at CAD$18.08 (US$13.58). This was $0.01 above the floor price.
  • The Ontario auction is of interest because Ontario’s program is scheduled to link to the CA/Quebec program on January 1, 2018.


Questions?

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