Updates for the period ending July 31, 2017


 

CA Compliance Offset Pricing
CCO 8s Bid 11.55 Ask 11.95
CCO 8s are ARB-issued offsets available for spot delivery and subject to 8 years during which they may be invalidated.
CCO 3s Bid 12.00 Ask 12.35
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 15.24 Ask 15.29
Allowances are the permits entities purchase to emit in CA.  Entities can substitute offsets for up to 8% of their total emissions. Prices shown are for the December futures contract.
CA Floor Price 2017 13.57  
The minimum price at which entities can purchase allowances in 2017.
Estimated CA floor price 2018 14.50  

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 July 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: 66.96 million
  • Compliance credits awaiting issuance: 30.27 million
CA and General Market Commentary:
  • On July 17th, the CA legislature approved AB398, a bill that extends the current Cap and Trade program through 2030. Even more significantly, both the Senate and the Assembly approved the bill by a 2/3 majority in a bi-partisan effort. The 2/3 majority is extremely significant because it now removes a key legal uncertainty- whether the program is a tax, and whether ARB had the right to implement it. Having achieved the threshold necessary to authorize the program, tax or not, the question becomes irrelevant.
  • This legislation should clear the path for linkage of California’s program to Ontario, and potentially WA and OR in the near future.
  • The legislation does make an unwelcome change to the offset rules. Rather than being able to use offsets to satisfy up to 8% of an entities emissions compliance, that threshold is reduced to 4% initially, with the possibility of an increase to 6% in 2025 if allowances prices reach a high ceiling. Furthermore, the legislation requires that half of the 4% be from projects with direct environmental benefits in the state of California. These restrictions potentially reduce demand for offsets from states outside of CA after 2020. However, ClimeCo believes that other jurisdictions will be linking with CA and may provide additional demand sufficient to make up for the lost demand in CA.
  • The CA Air Resources Board approved amendments to the Cap and Trade program on July 28th. These amendments had been in the works since last Fall, but had been delayed while the extension of the program was undertaken by the legislature. These amendments offer some helpful changes to ODS, Ag Methane, and Coal Mine Methane offset projects. For these project types, provisions regarding regulatory compliance have been adjusted so that rather than losing all the credits in a reporting period when a compliance issue occurs, the project can now limit the loss of credits to the period of the non-compliance if it can demonstrate the timing of the violation.
  • CA will hold its next allowance auction on August 15th. Results will be published on August 22nd, and ClimeCo will issue a report on the auction at that time. This will be an interesting auction, as it is the first since the new legislation.


Questions?

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

 

 

Updates for the period ending June 30, 2017


 

CA Compliance Offset Pricing
CCO 8s Bid 10.80 Ask 11.20
CCO 8s are ARB-issued offsets available for spot delivery and subject to 8 years during which they may be invalidated.
CCO 3s Bid 11.15 Ask 11.50
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 14.78 Ask 14.82
Allowances are the permits entities purchase to emit in CA.  Entities can substitute offsets for up to 8% of their total emissions. Prices shown are for the December futures contract.
CA Floor Price 2017 13.57  
The minimum price at which entities can purchase allowances in 2017.
Estimated CA floor price 2018 14.50  

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 June 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: 66.42 million
  • Compliance credits awaiting issuance: 27.73 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. As of this writing, a draft proposal from Governor Brown’s office for program extension includes a reduction in the offset usage limit from 8% to 4% initially, with the possibility of an increase to 6% in 2025 if allowances prices reach a high ceiling. ClimeCo believes it is a mistake to reduce the offset usage limit as it will reduce incentives for new investments in offset projects, and possibly even endanger the continuation of existing projects. ClimeCo continues to advocate for the extension of the program with the current 8% offset usage limit.
  • Allowance prices continued to climb in June, likely affected by a combination of the positive lawsuit decision previously reported, the May auction being fully subscribed, and the possibility of a post-2020 deal.


Questions?

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

 

 

Updates for the period ending May 31, 2017


 

CA Compliance Offset Pricing
CCO 8s Bid 10.55 Ask 10.85
CCO 8s are ARB-issued offsets available for spot delivery and subject to 8 years during which they may be invalidated.
CCO 3s Bid 10.85 Ask 11.15
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 14.25 Ask 14.30
Allowances are the permits entities purchase to emit in CA.  Entities can substitute offsets for up to 8% of their total emissions. Prices shown are for the December futures contract.
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 May 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: 62.65 million
  • Compliance credits awaiting issuance: 25.25 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- no progress was made in May, or in June to date, in moving toward a re-authorization bill. Uncertainty exists as to whether a bill will come in this current legislative session, with a 6/15/2017 deadline for the CA budget.
  • ARB’s May auction was fully subscribed for the first time since November, 2015. The auction had a bid-to-cover ratio of 1.23, and cleared at a price of $13.80, well above the $13.53 floor. The auction results in our view are a result of clarity provided by the ARB lawsuit decision. While the long-term fate of the program post-2020 is uncertain, firms now understand that they will have to comply at least through 2020, and so will have to make allowance and offset purchases to meet their obligation.


Questions?

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

 

 

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

 

 

ClimeCo Silver Sponsor 2017 Navigating the American Carbon World (NACW) Conference

Consider adding ClimeCo Corporation to your NACW Conference Map in San Francisco. As Silver Sponsor, this year our ClimeCo leadership team enthusiastically joins the 2017 dynamic program as both speakers and as an exhibitor. Derek Six kicks off our participation as part of the preconference program Wednesday, April 19. Derek is a thought leader on climate change policy, cap and trade design as well as offset program exploration.

Next, once the formal conference launches Thursday, April 20, ClimeCo founder Bill Flederbach joins a much-anticipated plenary entitled ‘State of the North American Carbon Market.’ At this time of carbon market fluctuation and change, Bill and this premier panel of carbon market experts are set to discuss present trends and the way forward. As founder of the largest producer of carbon credits within the Climate Action Reserve, Mr. Flederbach’s firm provides markets, clients and organizations with air quality program strategy and representation in global carbon markets.

Before or after our presentations, feel free to stop by Booth 124 in the Exhibit Hall to meet us in person. Not registered yet, visit http://www.nacwconference.com/register/

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