Glossary

Offset Pricing Monthly Market Digest – December 2020

Offset Pricing Monthly Market Digest – December 2020

Offset Pricing Monthly Market Digest – December 2020

Offset Supply Information:

All CCOs issued to date: 206.64 million

Compliance credits awaiting issuance: 18.32 million

CA and General Market Commentary:

  • 2021 will be an interesting year in the market, as full true-up for the 2018-2020 triennial compliance period is due on November 1st. Entities will be required to surrender all of their required allowances and offsets for their total 2018-2020 emissions at that time.

  • ClimeCo anticipates rising CCO prices in 2021 as entities seek to acquire and surrender their 8% offset limits for the 2018-2020 period. The spread between CCOs and CCAs has remained stubbornly and historically high during 2020, but we expect that demand will increase as entities seek to take advantage of the substantial cost savings represented by surrendering offsets instead of allowances up to their maximum allowable quantity.   


ClimeCo
 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.

Offset Pricing Monthly Market Digest – December 2020

Offset Pricing Monthly Market Digest – November 2020

Offset Pricing Monthly Market Digest – November 2020

Offset Supply Information:

All CCOs issued to date: 206.63 million

Compliance credits awaiting issuance: 17.55 million

CA and General Market Commentary:

  • A quarterly allowance auction was held on November 17, 2020, with results announced November 24th. Both current and future vintage auctions were over-subscribed.  Current vintage allowances cleared at $16.93 versus a floor price of $16.68, with a bid-to-cover ratio of 1.2.  Future 2023 vintages cleared at $17.35, with a bid-to-cover ratio of 1.37.  It is unusual to see the future vintages clear at a much higher price than the current vintage, as they cannot be used until 2023, and therefore should carry a lower price than current vintages.
  • ARB has also officially announced the 2021 auction reserve floor price of $17.71. This is the lowest price at which allowances can be purchased at auction at the four quarterly auctions which will occur in 2021. 
  • ClimeCo has begun providing our estimate of the 2022 floor price with an initial value of $18.86. This projection will be updated monthly as inflation data becomes available.


ClimeCo
 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.

Offset Pricing Monthly Market Digest – December 2020

Offset Pricing Monthly Market Digest – October 2020

Offset Pricing Monthly Market Digest – October 2020

Offset Supply Information:

All CCOs issued to date: 205.31 million

Compliance credits awaiting issuance: 17.55 million

CA and General Market Commentary:

The multi-month trend of allowances moving higher and CCO prices moving lower continued in October. The spread between Allowances and CCOs continues to widen to record historical levels.  Because 2020 is not a triennial compliance true-up year, we believe the lack of interest in CCOs is because compliance entities do not need to purchase CCOs for compliance until 2021, and many entities may be waiting until closer to the true-up deadline in order to observe the uncertain economy and better understand their emissions for 2020.

The ROC backlog dropped by approximately 6 million CCOs in October as ARB issuances of credits were much higher than average.

The next quarterly allowance auction will be held on November 17th, 2020, with results to be announced November 24th. While the previous auction did not clear and allowances were sold at the floor price of $16.68, we expect the last auction of the year to clear, as typical, and the clearing price to trend higher as participants begin to anticipate the higher 2021 floor price.  ClimeCo estimates the clearing price for 2021 at $17.73, based on estimates of inflation for the 12 months ending October 31st, 2020.


ClimeCo
 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.

How Has COVID-19 Changed the Way We Think About Corporate Emissions?

How Has COVID-19 Changed the Way We Think About Corporate Emissions?

How Has COVID-19 Changed the Way We Think About Corporate Emissions?


by Derek Six, Chief Business Officer | October 22nd, 2020


Like many companies with office-based employees, ClimeCo has mostly had its staff working remotely over the past six months.  Over the next year, I suspect many firms will have some employees return to the office, but I think there will be a portion of office jobs that will permanently telecommute.  Both employers and employees have discovered that it is possible to be productive at home, and that the time saved from commuting is a valuable resource.  With more employees working from home now than before, I started to think about what carbon footprints may look like for companies and how this has likely changed since their employees have shifted from company facilities to off-site locations.


Emissions in 2020 vs. 2019

For many years, ClimeCo has committed to reducing its emissions as much as practical and to offset the rest each year.  I am guessing that when we perform our emissions accounting for 2020, the total will be substantially lower than in 2019.  Most of this will result from reduced travel to conferences and sales meetings, but a part of this will also be due to the lower use of electricity and natural gas at our office locations.  I think other companies will find the same when they do their accounting for 2020 – less energy used on-site; reduced heating and cooling costs; reduced purchases of office, breakroom, and bathroom supplies; and less spent on office space maintenance.

For companies that do extensive GHG reporting, this may bring cheers: “Look how much we reduced our emissions in 2020!”.  But is that true?  Or did we shift these same emissions to the homes of our employees?

Computers, monitors, lights, and coffee makers are buzzing between 9 and 5 each weekday at telecommuters’ homes across the country.  What responsibility do companies have for these employee emissions?  Even in “normal” times, should companies think more about employee emissions and employee health and sustainability issues than they previously have?  Could companies make a more significant impact by leveraging their size and scale to address employee sustainability issues at home?


Making a Bigger Impact

Stephen Bay, CEO of EarthUP, Inc., and Stacy Smedley, Skanska’s Director of Sustainability, recently introduced me to a new concept which they call “Scope 4 Emissions”.  For those of you unfamiliar with GHG reporting, companies typically have considered the following 3 Scopes described in the Greenhouse Gas Protocol:

  • Scope 1 – Direct Emissions: on-site fuel combustion, transport fuels for fleet vehicles, air conditioning leaks, etc., things that are under the direct control of the facility

  • Scope 2 – Indirect Emissions: purchased electricity, heat, and steam

  • Scope 3 – Other Indirect Emissions: business travel, waste, water use, purchased goods, services, etc.

Stacy and Stephen suggest that Scope 4 would include emissions from employee energy use, employee waste, and employee commuting.

Why is their concept of Scope 4 emissions compelling to me?  In times of COVID-19 telecommuting, the answer is easy – companies should take responsibility for the shifted emissions resulting from employees working from home.  But even in more “normal” times, I think there is still a compelling argument to do this.  Companies could make a significant impact on global emissions by assisting the employees to address household emissions.  A thoughtful strategy for doing this could include helping employees improve indoor air quality in their homes, reduce their energy bills and waste, as well as improve their quality of life, all while saving them money.

Many companies have found that reducing their corporate emissions by just a little bit is pretty easy and generally profitable, as simple solutions like installing programmable thermostats and more efficient lighting in the office can save them a lot of money; however, as the reduction goals become more ambitious, solutions tend to become more challenging.  Why not widen the net, so to speak, to allow companies to impact employees’ lives significantly?  Wouldn’t this lead to improved employee retention, reduced employee healthcare costs, and increased employee satisfaction and productivity?

For me, taking some responsibility for emissions of telecommuting employees is arguably necessary for any company committed to accurate GHG reporting, but taking additional responsibility for their employee emissions may be good business.

About the Author

Derek Six serves as Chief Business Officer at ClimeCo, where he leads the company’s cross-cutting business functions, as well as the firm’s ODS management program and private equity fund. He holds an MBA in investment management and portfolio analysis from Pennsylvania State University’s Smeal College of Business.

Offset Pricing Monthly Market Digest – December 2020

Offset Pricing Monthly Market Digest – September 2020

Offset Pricing Monthly Market Digest – September 2020

CA and General Market Commentary:

Offset Supply Information:

All CCOs issued to date: 201.97 million
Compliance credits awaiting issuance: 23.29 million

CA and General Market Commentary:

The trend of allowances moving higher and CCO prices moving lower continued in September. The spread between Allowances and CCOs continues to widen to record historical levels.  Because 2020 is not a triennial compliance true-up year, we believe the lack of interest in CCOs is because compliance entities do not need to purchase CCOs for compliance until 2021, and many entities may be waiting until closer to the true-up deadline in order to observe the uncertain economy and better understand their emissions for 2020.


ClimeCo
 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.