Offset Pricing Monthly Market Digest – March 2019

by | Apr 8, 2019

Offset Supply Information:

All CCOs issued to date: 151.95 million
Compliance credits awaiting issuance: 18.03 million

CA and General Market Commentary:

  • ARB issued 6 million new offsets in March and reduced the ROC backlog to 18.03 million, its lowest point in several years.
  • On April 8th, the Intercontinental Exchange (ICE; listed and traded the first California Carbon Offset futures contract. ClimeCo was pleased to be involved in this historic trade.  The contract is for the physical delivery of CCO-0s – offsets whose invalidation period has expired.  The first trade was for delivery of CCO-0s in December 2021 and was priced at $16.66.  While the contract does not directly provide pricing for the CCO-8s and CCO-3s generated by offset projects today, it does provide a price signal that will be useful for developers and allows a mechanism for hedging offset credits  Using the $16.66 trade price, and the April 5th settlement price of the DEC21V21 allowance futures contract of $19.15, the trade implies a 13% discount for the risk-free CCO-0 versus allowances.  It is important to note that this new contract does not distinguish between DEBs and non-DEBs credits (“DEBs” describes credits that qualify as having direct environmental benefits in the state of California.  Emitters are limited, from 2021 onward, to a maximum offset usage of 4% for non-DEBs credits).

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