Glossary

Offset Pricing Monthly Market Digest – November 2020

Offset Pricing Monthly Market Digest – November 2020

Offset Pricing Monthly Market Digest – November 2020

Offset Supply Information:

All CCOs issued to date: 206.63 million

Compliance credits awaiting issuance: 17.55 million

CA and General Market Commentary:

  • A quarterly allowance auction was held on November 17, 2020, with results announced November 24th. Both current and future vintage auctions were over-subscribed.  Current vintage allowances cleared at $16.93 versus a floor price of $16.68, with a bid-to-cover ratio of 1.2.  Future 2023 vintages cleared at $17.35, with a bid-to-cover ratio of 1.37.  It is unusual to see the future vintages clear at a much higher price than the current vintage, as they cannot be used until 2023, and therefore should carry a lower price than current vintages.
  • ARB has also officially announced the 2021 auction reserve floor price of $17.71. This is the lowest price at which allowances can be purchased at auction at the four quarterly auctions which will occur in 2021. 
  • ClimeCo has begun providing our estimate of the 2022 floor price with an initial value of $18.86. This projection will be updated monthly as inflation data becomes available.


ClimeCo
 is a respected project developer, advisor and trader of environmental commodity market products. Specialized expertise in regional criteria pollutant trading programs, California cap‐and‐trade, voluntary markets and project development and financing of internal CO2 abatement systems complement ClimeCo’s diverse commodity portfolio. Within the Climate Action Reserve, ClimeCo is the largest developer of U.S. GHG‐offset projects and producer of U.S. voluntary carbon offsets, managing projects that reduce more than four million tonnes of CO2e per year. For information, contact 484‐415‐0501 or nmarshall@climeco.com.

Offset Pricing Monthly Market Digest – November 2020

Offset Pricing Monthly Market Digest – October 2020

Offset Pricing Monthly Market Digest – October 2020

Offset Supply Information:

All CCOs issued to date: 205.31 million

Compliance credits awaiting issuance: 17.55 million

CA and General Market Commentary:

The multi-month trend of allowances moving higher and CCO prices moving lower continued in October. The spread between Allowances and CCOs continues to widen to record historical levels.  Because 2020 is not a triennial compliance true-up year, we believe the lack of interest in CCOs is because compliance entities do not need to purchase CCOs for compliance until 2021, and many entities may be waiting until closer to the true-up deadline in order to observe the uncertain economy and better understand their emissions for 2020.

The ROC backlog dropped by approximately 6 million CCOs in October as ARB issuances of credits were much higher than average.

The next quarterly allowance auction will be held on November 17th, 2020, with results to be announced November 24th. While the previous auction did not clear and allowances were sold at the floor price of $16.68, we expect the last auction of the year to clear, as typical, and the clearing price to trend higher as participants begin to anticipate the higher 2021 floor price.  ClimeCo estimates the clearing price for 2021 at $17.73, based on estimates of inflation for the 12 months ending October 31st, 2020.


ClimeCo
 is a respected project developer, advisor and trader of environmental commodity market products. Specialized expertise in regional criteria pollutant trading programs, California cap‐and‐trade, voluntary markets and project development and financing of internal CO2 abatement systems complement ClimeCo’s diverse commodity portfolio. Within the Climate Action Reserve, ClimeCo is the largest developer of U.S. GHG‐offset projects and producer of U.S. voluntary carbon offsets, managing projects that reduce more than four million tonnes of CO2e per year. For information, contact 484‐415‐0501 or nmarshall@climeco.com.

Impact Careers: Sustainability, the ClimeCo Story, and Career Opportunities

Impact Careers: Sustainability, the ClimeCo Story, and Career Opportunities

Impact Careers: Sustainability, the ClimeCo Story, and Career Opportunities

ClimeCo’s President & CEO, Bill Flederbach, joined Penn State’s Smeal College of Business for the Impact Careers: Sustainability, the ClimeCo Story, and Career Opportunities webinar. The panel also includes Penn State’s Smeal College of Business’ Director of Sustainability, Erik Foley, and Assistant Director of Alumni Career Services, Jennifer Nicholas. In the webinar, the panel discusses the latest trends in the movement to reduce carbon emissions and how those seeking environmental job opportunities strategize to appeal to this sector. These interdisciplinary perspectives bring this impactful environmental discussion to life with practical takeaways.

About Smeal College of Business

The Penn State Smeal College of Business is a vibrant intellectual community offering highly ranked undergraduate, graduate, doctoral, and executive education opportunities to more than 6,000 students from across the country and around the world. Since our introduction in 1953, we have prepared 95,000 students for professional success, annually adding to Penn State’s vast alumni network. We are a destination of choice for top global organizations seeking talent that will make a positive difference. Through our leading faculty and network of research centers and institutes, we are a source of knowledge that influences the business practices of tomorrow. We are forging connections, creating opportunities, and producing results.

Smeal’s Contact Information

Website: https://www.smeal.psu.edu/http://npamani.com/
YouTube: https://www.youtube.com/channel/UCtNnZBE_6AUtySfwaoMcdWA
Instagram: @smealcollege_pennstate
Twitter: https://twitter.com/SmealCollege
Facebook: https://www.facebook.com/smealcollege
LinkedIn: https://www.linkedin.com/company/penn-state-smeal-college-of-business/

About ClimeCo 

ClimeCo LLC is a respected advisor, transaction facilitator, and trader of environmental commodity market products. Specialized expertise in regulated carbon, regional criteria pollutant trading programs, voluntary markets, and project development and financing of GHG abatement and mitigation systems complement ClimeCo’s diverse portfolio. For more information or to discuss how ClimeCo can drive value for your organization, contact us at 484.415.0501, info@climeco.com, or through our contact us page.

Offset Pricing Monthly Market Digest – November 2020

Offset Pricing Monthly Market Digest – September 2020

Offset Pricing Monthly Market Digest – September 2020

CA and General Market Commentary:

Offset Supply Information:

All CCOs issued to date: 201.97 million
Compliance credits awaiting issuance: 23.29 million

CA and General Market Commentary:

The trend of allowances moving higher and CCO prices moving lower continued in September. The spread between Allowances and CCOs continues to widen to record historical levels.  Because 2020 is not a triennial compliance true-up year, we believe the lack of interest in CCOs is because compliance entities do not need to purchase CCOs for compliance until 2021, and many entities may be waiting until closer to the true-up deadline in order to observe the uncertain economy and better understand their emissions for 2020.


ClimeCo
 is a respected project developer, advisor and trader of environmental commodity market products. Specialized expertise in regional criteria pollutant trading programs, California cap‐and‐trade, voluntary markets and project development and financing of internal CO2 abatement systems complement ClimeCo’s diverse commodity portfolio. Within the Climate Action Reserve, ClimeCo is the largest developer of U.S. GHG‐offset projects and producer of U.S. voluntary carbon offsets, managing projects that reduce more than four million tonnes of CO2e per year. For information, contact 484‐415‐0501 or nmarshall@climeco.com.

Offset Pricing Monthly Market Digest – November 2020

Offset Pricing Monthly Market Digest – August 2020

Offset Pricing Monthly Market Digest – August 2020

Offset Supply Information:

All CCOs issued to date: 190.88 million

Compliance credits awaiting issuance: 21.96 million

CA and General Market Commentary:

  • ARB’s August auction saw a $16.68 clearing price for its current vintages, with a bid-to-cover ratio of 0.89. The advance vintage auction cleared at $16.73 with a bid-to-cover ratio of 1.29.  This is an unusual result, typically entities would expect to receive a discount for purchasing future years’ allowances that cannot be used for 3 years.  It was also interesting to see that while only 3.5% of current vintage allowances were purchased by speculators, 19.9% of future vintage allowances were purchased by speculators.
  • Allowances continued to inch higher in August, while CCO prices inched lower. The spread between Allowance and CCO is historically high.  Because 2020 is not triennial compliance true-up year, we believe the lack of interest in CCOs is because compliance entities do not need to purchase CCOs for compliance until 2021, and many entities may be waiting until closer to the true-up deadline in order to observe the uncertain economy and better understand their emissions for 2020.

ClimeCo LLC is a respected project developer, advisor and trader of environmental commodity market products. Specialized expertise in regional criteria pollutant trading programs, California cap‐and‐trade, voluntary markets and project development and financing of internal CO2 abatement systems complement ClimeCo’s diverse commodity portfolio. Within the Climate Action Reserve, ClimeCo is the largest developer of U.S. GHG‐offset projects and producer of U.S. voluntary carbon offsets, managing projects that reduce more than four million tonnes of CO2e per year. For information, contact 484‐415‐0501 or nmarshall@climeco.com.

A New Approach to Mitigating Future Carbon Emissions

A New Approach to Mitigating Future Carbon Emissions

A New Approach to Mitigating Future Carbon Emissions


by David Priddy, Vice President of Business Development | August 27th, 2020

Seldom has a day gone by that we have not heard of a company or organization announcing new climate change commitments.  Just in the past few months, we have witnessed companies, including Apple, Delta Air Lines, and Unilever, announcing bold carbon-neutrality goals as they seek to do their part to address the climate crisis.  In fact, Microsoft’s plan to offset its entire carbon footprint dating back to its inception in 1975 may represent the most ambitious commitment that we’ve seen yet!

So, this leads us to a question we are often asked:

How can my organization achieve carbon neutrality while we continue to grow?”

While it may be game-on in the pursuit to green up your existing operations, you must also consider your company’s future.  As your business grows, implements new projects, expands office space, increases staff, constructs new facilities, or locates new business sites, you will contribute additional GHGs above and beyond your existing footprint.  This will need to be addressed as you plan your mitigation approach. 

So how can this be achieved?  Will there be enough carbon offsets available to meet your needs?  More importantly, is there a way for you to have more direct engagement when it comes to emission reduction activities that will align with your growth timeline?  Well, thanks to Climate Forward, a new program recently instituted by the Climate Action Reserve (the Reserve), the answer is yes!

Climate Forward

Climate Forward is a program that provides a practical solution for companies and other organizations that seek cost-effective mitigation of anticipated GHG emissions. The program is designed to facilitate investments in emission reduction projects today that will result in future GHG reductions that are aligned to mitigate the future emissions of a company, organization, or project.  Its purpose is to incentivize the implementation of emission reduction projects that would otherwise be unviable using traditional carbon offset programs.

Under this program, the Reserve issues Forecasted Mitigation Units (FMUs) upfront for a project’s entire crediting period upon the completion of its confirmation, a process conducted by an independent third party that demonstrates that the project has been implemented according to an approved methodology.  The methodologies within this program contain the eligibility rules, quantification methods, and documentation and confirmation requirements that ensure the consistency and rigor of GHG reduction accounting for a specific mitigation project.  Meanwhile, the up-front issuance of FMUs helps to shift the project’s economic curve to better incentivize long-term mitigation efforts, allowing the company to plan and implement emission reduction projects that align with their sustainability objectives.


FMUs versus Offsets

While FMUs and offsets are similar in that they are both equal to the reduction of one metric ton of carbon dioxide equivalent (CO2e), there are several differentiating factors between them.  The primary difference is that FMUs represent emissions that are expected to be reduced (ex-ante), while offsets represent emissions that have already been reduced and have completed a rigorous monitoring and verification process (ex-post).  While offsets are typically applied against past emission-producing activities, FMUs can only be applied against a future stream of greenhouse gas emissions.  While the detailed auditing process for both project types is similar, they occur at different stages of the project cycle: for offset projects, the “verification” process is conducted periodically throughout the crediting period but, for FMU projects, the “confirmation” process is done only once, at the beginning of the crediting period. This one-time confirmation process helps to facilitate the monetization of FMUs in the early stages of the project, which in turn can be used to support the financing of future activities associated with the project.


Benefits and Applications

The Climate Forward program offers several benefits to organizations and developers that are seeking carbon neutrality:

  • It reduces the barriers for innovative, targeted climate solutions.
  • It can incentivize the development of carbon projects that produce co-benefits that may help the organization achieve ESG goals above and beyond climate impacts; such co-benefits can be tailored to the organization’s goals and values.
  • Projects can be targeted to occur in the communities that are directly impacted by their operations.
  • Projects under these types of programs help demonstrate climate leadership.

One potential application of Climate Forward is for GHG mitigation requirements under the California Environmental Quality Act (CEQA).  CEQA requires state and local agencies to follow a protocol of analysis and public disclosure of future environmental impacts of a proposed project and to adopt feasible measures to mitigate those impacts.  Climate Forward can provide entities that are subject to CEQA GHG mitigation requirements with a cost-effective and environmentally rigorous option for future GHG mitigation.

Another potential application of Climate Forward is for developers of mixed-use communities to participate in reforestation projects, where the purchase of FMUs could be used to mitigate the carbon footprints of their projects while incentivizing reforestation efforts. In fact, ClimeCo is presently supporting a reforestation project in the Mississippi River Basin in partnership with Restore the Earth Foundation, using Climate Forward’s Reforestation methodology; the long-term goal of this project is to restore a total of 1 million acres using this methodology.


Getting Involved

Climate Forward provides organizations with a unique opportunity to partner with other organizations to implement sustainable projects while providing benefits to their future mitigation efforts.  As of this writing, there are a half-dozen methodologies that are either approved or under development in the Climate Forward program; however, there are many more creative, innovative mitigation activities that could be considered for development as a future methodology. The program is designed to expand the scope of feasible GHG mitigation project types by encouraging third parties to submit their methodologies for mitigation activities.  So, if you have an idea in mind for an innovative emission reduction or carbon sequestration project, ClimeCo is happy to help! 

About the Author

Dave Priddy is ClimeCo’s Vice President of Business Development. He has more than 25 years of experience in the environmental management field.  He is responsible for the strategy, development, and promotion of ClimeCo’s Nature-based Solutions initiative, and for developing mutually-beneficial partnerships with both landowners and conservation organizations that result in projects that generate positive environmental attributes. David holds a B.S. in Engineering from the University of Louisiana, Lafayette.