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Offset Pricing Monthly Market Digest – April 2020

Offset Pricing Monthly Market Digest – April 2020

Making a difference today for a better world tomorrow.

Offset Pricing Monthly Market Digest – April 2020

Offset Supply Information:
All CCOs issued to date: 174.45 million
Compliance credits awaiting issuance: 32.84 million

CA and General Market Commentary:

  • ARB issued only 1.16 million CCOs during the month of March. The ROC backlog (Compliance credits awaiting issuance) climbed by 3.46 million, and is now near the upper end of its historic range.  Smaller monthly issuances and a growing backlog may be due to COVID-19 disruptions at ARB.
  • CCA prices recovered slowly in April, but remain well below the $16.68 auction floor price. The next scheduled auction is in May.

ClimeCo Corporation 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 – April 2020

Offset Pricing Monthly Market Digest – March 2020

Making a difference today for a better world tomorrow.

Offset Pricing Monthly Market Digest – March 2020

Offset Supply Information:

All CCOs issued to date: 173.29 million
Compliance credits awaiting issuance: 29.38 million

CA and General Market Commentary:

  • ARB CCA and CCO prices fell precipitously in March as Californians stayed at home and emissions are expected to fall dramatically as a result, at least in the near term. Prices are now approximately $1.40 below the auction floor price for 2020.
  • Volatility has been extremely high, and the Intercontinental Exchange (ICE) has raised margin requirements for traders several times. Increases in capital required to trade in the CCA market has likely exacerbated the decline below the floor price.
  • It is important to remember that if allowances go unsold at the next auction in May, which seems likely at this point, then that supply of approximately 66 million allowances being auctioned will be removed from the market for a substantial period of time. The supply of allowances in the market is to some extent self-correcting, so we anticipate futures prices returning to a point at least slightly above the floor within the next few months. 

ClimeCo Corporation 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 – April 2020

Offset Pricing Monthly Market Digest – February 2020

Making a difference today for a better world tomorrow.

Offset Pricing Monthly Market Digest – February 2020

Offset Supply Information:

All CCOs issued to date: 171.06 million

Compliance credits awaiting issuance: 33.81 million

CA and General Market Commentary:

  • ARB’s quarterly allowance auction was held on February 19th, with results announced February 26th. Current vintage allowances cleared at $17.87, with a strong bid-to-cover ratio of 1.52.

ClimeCo Corporation 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 – April 2020

Offset Pricing Monthly Market Digest – January 2020

Making a difference today for a better world tomorrow.

Offset Pricing Monthly Market Digest – January 2020

Offset Supply Information:

All CCOs issued to date: 170.43 million

Compliance credits awaiting issuance: 32.59 million

CA and General Market Commentary:

  • On January 30th, the California Air Resources Board (ARB) announced the results of their investigation into alleged regulatory violations at the Scenic View Dairy. As a result of the investigation, which was initiated on November 18, 2019, ARB is invalidating 18,867 CCOs generated by the project, CALS5040-C, Scenic View Dairy.  This marks the completion of the third invalidation investigation conducted by ARB in the program’s history, and the second time CCOs have been invalidated.
  • To date, less than 1% of all issued offsets have been invalidated. However, each invalidation event reminds participants of the potential risk and potentially impacts small emitters desire to purchase non-guaranteed CCOs.
  • ARB’s next quarterly allowance auction will be held on February 19th, with results announced February 26th.

ClimeCo Corporation 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 – April 2020

Offset Pricing Monthly Market Digest – December 2019

Making a difference today for a better world tomorrow.

Offset Pricing Monthly Market Digest – December 2019

Offset Supply Information:

All CCOs issued to date: 166.58 million

Compliance credits awaiting issuance: 27.95 million

CA and General Market Commentary:

  • On December 2nd, ARB announced that the 2020 Auction Reserve (floor) price will be $16.68. This was in line with expectations.  Our chart above has been updated to reflect this 2020 floor price, and we have begun estimating the 2021 floor price at $17.85.
  • Allowances prices climbed during the last two weeks of the year. This increase seemed to coincide with the expiration of the December 2019 futures contract, as participants closed those contracts and entered into new futures positions with 2020 expirations.

ClimeCo Corporation 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 – April 2020

Offset Pricing Monthly Market Digest – November 2019

Making a difference today for a better world tomorrow.

Offset Pricing Monthly Market Digest – November 2019

Offset Supply Information”

All CCOs issued to date: 165.31 million

Compliance credits awaiting issuance: 27.34 million

CA and General Market Commentary:

  • On December 2nd, ARB announced that the 2020 Auction Reserve (floor) price will be $16.68. This was in line with expectations.  Our chart above has been updated to reflect this 2020 floor price, and we have begun estimating the 2021 floor price at $17.85.
  • On November 18th, ARB announced that it had opened an Invalidation Investigation against Scenic View Dairy, project CALS5040. The project is an agricultural methane capture project located in Michigan and is operated by Scenic View Dairy, LLC.  36,118 credits are under investigation.  Information released by ARB regarding the investigation can be found here: https://ww3.arb.ca.gov/cc/capandtrade/offsets/notice.of.offset.investigation.11.18.19.pdf
  • This is the third invalidation investigation announced by ARB in the history of the program. Previous investigations occurred in 2014 and 2016.  One invalidation did result from the investigation in 2014, causing the invalidation of 88,955 credits.
  • The announcement of the investigation caused some limited concern among buyers, reminding them that invalidation is a possible risk, but the small quantity being investigated is unlikely to significantly impact the market.

ClimeCo Corporation 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.