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.

Offset Supply Information:

All CCOs issued to date: 164.23 million
Compliance credits awaiting issuance: 25.27 million 

CA and General Market Commentary:

• On November 4^th, ARB released the 2018 Emissions Report. Emissions for sources covered by the Cap and Trade Program decreased by 0.2% from 2017.  Reported emissions were 319.9 million MtCO2e, versus a cap of 358.3 million MtCO2e.
• Through 2018, the surplus of allowances continued to grow, because actual emissions in 2018 were less than the 2018 allowance budget.
• However, it is interesting to note that if actual emissions continue to decline by only 0.2%/year going forward, then in 2022, emissions will exceed the cap for the first time, and surplus allowances in the market would begin to be drawn down.

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.

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.