Increasing Investor Interest in California’s Carbon Credits

The WCI Investment Opportunity

Cupertino, CA – WEBWIRE – Monday, March 1, 2021

An increasing number of investors are buying California Carbon Allowances, a relatively lesser known regionalised carbon asset. Over the past few years, investor participation has steadily gone up in analysis done by CaliforniaCarbon.info (CCI).

CCI has published an InSights report titled The WCI Investment Opportunity. California Carbon Allowances (CCAs). It posits that on all the key metrics used to judge an asset, including expected return on investment, liquidity, and the degree of correlation with other asset classes, CCAs perform strongly. The regulatory risks of the market are also analysed by program experts, and the results show little to discourage even a cautious investor.

The insights within the report are grounded in CCI’s own CarbonOutlook™ model, which forecasts emissions in different sectors over the next decade. The model has 200+ variables, and is used to generate three different scenarios, each of which includes an expected price path and a forecasted return on investment. The insights of the model are then augmented with analysis of the futures market, and are grounded in historical results from other carbon markets.

The report also offers advice concerning how to invest, including investment fund profiles, and guidance on how to invest independently.

The report is available from CaliforniaCarbon.info upon vetted request.

To learn more visit www.CaliforniaCarbon.info/Insight

Table of contents
Executive Summary / Introduction

1            Executive Summary

2            Introducing the Asset
2.1         A history of the market
2.2         Market past performance: A safe asset?

3            Forecasts: 2021-2030
3.1         CarbonOutlookTM Model
3.2         Key variables considered for the present forecast
3.3         The Scenarios
3.3.1     Likely Scenario
3.3.2     Slow-Economic Scenario
3.3.3     Heroic Climate Action Scenario
3.4         Forecasted Price Path
3.5         Forecasted Return on Investment

4            The Futures Market
4.1         Liquidity within the Market
4.2         Managed Money

5            EU Emissions Trading System

6            Correlation
6.1         Correlation with other major asset classes
6.2         Correlation with Fossil Fuels

7            How to Invest
7.1         Different Investing Options
7.2         Holding Limit
7.3         Regulatory Hurdles to Obtaining a CITSS Account
7.4         Company Profiles

8            Conclusion
8.1         Key Opportunities
8.2         Key Risks

9            Appendix
9.1         Correlation Matrix
9.2         Cap-and-Trade Regulation
9.3         CITSS Account

List of Figures
Figure 1 California and Quebec Carbon Allowance Prices 2014 – eo. 2020
Figure 2 Return on Investment, Other
Figure 3 Return on Investment, Major U.S. Indices
Figure 5 Forecasted ROI in the no-lift-off scenario and the opportunity cost scenario between 2020 and 2030
Figure 6 Forecasted ROI in the three principal scenarios between 2020 and 2030
Figure 7 CFTC: Total reported positions on CCAs
Figure 8 CFTC: Managed money positions
Figure 9 CFTC: Proportion of different groups within the futures market
Figure 10 Price of carbon emissions in the EU
Figure 11 Graphs to illustrate correlation between CCA and different indices since 2013
Figure 12 Graphs to show correlation between CCAs and fossil fuel futures

List of Tables

Table 1 Return on Investment since 2014
Table 2 ROI in the five scenarios by 2030
Table 3 Correlation Coefficients with CCAs
Table 4 CCA correlation coefficients with fossil fuel futures