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Offset Pricing Monthly Market Digest – October 2018

by | Nov 6, 2018

Offset Supply Information:

  • All CCOs issued to date: 139.78 million
    Compliance credits awaiting issuance: 14.04 million
    CA and General Market Commentary:
  • Prices for offsets dropped dramatically at the end of the month, as the deadline passed for entities completing their final submissions for the full 3-year 2015-2017 triennial period (CP2). While prices for CA Allowances were up $0.08 from September, CCOs dropped $0.30-$0.40.  This reaction was to be expected, as buyers of offsets today will not need them for compliance until October 2019.

The backlog of compliance credits awaiting issuance dropped dramatically as ARB apparently expended significant energy to issue to CCOs prior to the November 1st deadline for CP2 compliance. Only 1.3 million new ROCs were registered and added to the backlog during October, while ARB issued 20.91 million CCOs, reducing the backlog by a net 19.6 million ROCs.

Three potential market-moving events are on the horizon:

  • On November 14th, ARB will hold its last quarterly allowance auction for 2018, and results will be announced on November 21st.  The clearing price for the last auction, held in August, was $15.05.  Last year, auction clearing prices ticked upward throughout the year, with November’s auction settling well above the anticipated floor price for the next year.
  • On November 15th, the Board of ARB will hold a public meeting to discuss proposed amendments to the Cap and Trade Regulation.  Meeting announcement and supporting documents can be viewed here: https://www.arb.ca.gov/regact/2018/capandtrade18/capandtrade18.htm
  • On December 1st, ARB will announce the auction reserve (floor) price for 2019 auctions. 

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.