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Offset Pricing Monthly Market Digest – May 2019

by | Jun 7, 2019

Offset Supply Information:

All CCOs issued to date: 154.78 million
Compliance credits awaiting issuance: 23.06 million

CA and General Market Commentary:

On May 22nd, ARB released the results of the second quarterly allowance auction for 2019. The clearing price for current vintage allowances was $17.45.  The auction cleared $0.76 over our estimate for the 2020 auction reserve price.  The auction was strongly subscribed with a bid-to-cover ratio of 1.46.  The result may be even more bullish than it appears considering that PG&E did not participate in the auction, likely due to PG&E’s ongoing bankruptcy negotiations.  As an entity with one of the largest compliance obligations in the program, their absence may lead to a later need to procure allowances.

Year-to-date, only 13.32 million offsets have been issued by ARB. If this issuance rate continues at a similar pace for the remainder of the year, 2019 would see only 32 million offsets issued.  That result would be a substantially lower annual issuance rate than the 54.17 million offsets issued in 2018.  

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.