Offset Pricing Monthly Market Digest – March 2020

by | Apr 7, 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.