CaliforniaCarbon publishes updated 2030/2050 Forecast for WCI Cap-and-Trade Market

CaliforniaCarbon.info publishes the annual update to its market-leading forecast for WCI Cap-and Trade. The report is an update to the previous year’s effort, adding in new facility production data from 2020 and a revised emissions, supply-demand, and price forecast. The updated 2030 Forecast Report combines the latest industrial data across each major sector to give an update on the near-term emissions outlook as the North American economy climbs its way out of the effects of COVID-19. The new report also covers the change in Federal climate policy after Biden’s April announcements.

This report estimates Californian and Quebec emissions in specific sector and entity-level detail for 2020 and 2021, and in the light of the recent pandemic, it charts the probable pathways back to a more ‘normal’ level of economic activity. It also updates the model scenarios to better reflect the ‘new normal’ which economies may well be heading towards.
 
CaliforniaCarbon.info has combined past emissions data with company annual reports and industry-level production data, thus enabling a high degree of confidence in accurately predicting the still unannounced 2020 and 2021 emissions.

“We have then combined our 2030 and 2050 Forecast into the report. Perhaps most significantly, the analysis includes potential program scenarios and price pathways through to 2050. The 2050 scenarios are built around the targets presented in California and Quebec’s Climate Goals. This represents one of the market’s first ever 2050 carbon price forecasts under multiple regulatory and economic scenarios. This sort of time-range will be crucial for long-horizon decision-making for businesses throughout California and Quebec,” shared Harry Horner, Lead of Insights and Research.

The report models 4 scenarios till 2030 and 5 scenarios till 2050:
 1. Present Trajectory Scenario
 2. Off-the Rails (high emissions) Scenario
 3. Meeting Climate Goals Scenario
 4. Accelerated Climate Action Scenario
 5. Delayed Climate Goals Scenario
 
The report is available on https://go.californiacarbon.info/WCI-2030-Forecast-Report-2021-compendium

To learn more visit our website or contact insights@CaliforniaCarbon.info

Table of Contents:

1       Executive Summary. 
1.1         Cap-and-Trade Background Brief. 
1.2         Sectoral Emission Reduction Programs. 
1.3         Report Results. 
2       Introduction. 
2.1         The Global Context. 
2.2         Legislation in California. 
2.3         California Covered Emission Trends. 
2.4         Legislation in Quebec. 
2.5         Quebec’s Covered Emission Trends. 
3       California’s Covered Emissions Forecast 2021. 
3.1         Expectations of 2020 Validated Emissions and 2021 Forecast. 
3.2         California’s Covered Emissions Forecast for 2020 and 2021. 
3.3         California’s Overall Emissions. 
4       California Key Sectors: Review and Forecast. 
4.1         Transportation Fuels. 
4.1.1          Review… 
4.1.2          Outlook and Impact of COVID… 
4.1.3          Transportation Sector Forecast for 2020 and for 2021. 
4.2         Natural Gas Suppliers. 
4.2.1          Review… 
4.2.2          Outlook and impact of COVID… 
4.3         Refineries and Hydrogen Plants. 
4.3.1          Review… 
4.3.2          Outlook and Impact of COVID… 
4.3.3          Refineries Sector Forecast for 2020 and 2021. 
4.4         Oil and Gas Production. 
4.4.1          Review… 
4.4.2          Outlook and Impact of COVID… 
4.4.3          Forecast for Oil and Gas Sector in 2020 & 2021. 
4.5         Fossil Fuel Power Generation. 
4.5.1          Review… 
4.5.2          Emissions Forecast for 2020 and 2021. 
4.6         Electricity Imports. 
4.6.1          Review… 
5       Quebec’s Covered Sector Forecast for 2019 & 2020. 
5.1         Quebec’s Overall Emissions Trajectory. 
6       Quebec’s Key Sectors. 
6.1         Transportation. 
6.1.1          Review… 
6.1.2          Forecast. 
6.2         Natural Gas Distribution by End-Use. 
6.2.1          Review… 
7       2030 Emissions Forecast. 
7.1         The forecast is based on CaliforniaCarbon’s model 
7.2         Key variables considered for the present forecast. 
7.3         Covid-19 impact on the 2030 WCI market: excess allowances remain in the market  
7.3.1          Estimate for the Covid relief. 
7.4         Long term scenarios considered. 
7.4.1          Present Trajectory scenario: 
7.4.2          Off-the-rails scenario. 
7.4.3          Meeting Climate Goals scenario. 
7.4.4          Accelerated Climate Action Scenario. 
7.4.5          Interpreting the scenarios. 
7.5         Sectoral Emissions analysis. 
7.5.1          Covid-19 shows up again. 
7.5.2          Transportation and electricity emissions linked: driven by EVs  
7.5.3          Detailed sector analysis. 
8       2030 outlook for offsets. 
8.1         California’s AB398 is reshaping offsets in this decade. 
8.2         Larger entities are likely to keep using offsets. 
8.3         Jurisdiction-wise outlook for Offsets till 2030 and role of DEBs and non-DEBs  
9       Demand-supply gap of allowances and ‘Tension Ratios’ 
9.1         The market is sitting on about 490.5 million ‘bank of allowances’ 
9.2         The demand-supply gap tension has reduced. 
9.2.1          Role of Covid-19 (again) and progress in the transportation sector  
9.2.2          Defining Tension Ratios. 
9.3         The bank will likely start to get depleted in 2023. 
10     Year wise CCA Price Forecast up to 2030. 
10.1      Forecasted auction prices. 
10.1.1        Model assumes rationality, but markets are irrational 
10.2      Drawdown of reserves in comparison with the allowances allocated/sold and offsets issued   
10.3      Balances in entity and jurisdiction accounts. 
10.4      Value of allowances auctioned and offsets bought. 
11     Crystal Ball 2050. 
11.1      Assumptions for constructing the post-2030 market. 
11.2      Observations and key variables at play. 
11.3      Scenarios till 2050. 
11.3.1        Present Trajectory Scenario. 
11.3.2        Off the Rails Scenario. 
11.3.3        Climate Goals met Scenario. 
11.3.4        Accelerated Climate action Scenario. 
11.3.5        Delayed Climate Goals Scenario. 
11.3.6        Year wise CCA Price Forecast up till 2050. 
11.4      Drawdown of reserves in comparison with the allowances allocated/sold and offsets issued  
12     Variables factored in and key assumptions.
12.1      California Allowance Budget till 2030 (million tons of CO2e). 
12.2      Quebec Allowance Budget till 2030 (million tons of CO2e). 
12.3      Variables taken into account in the forecasting. 
13     Information sources. 
Data sources for Analysis. 
About CaliforniaCarbon.info. 
Disclaimer. 

List of Figures:

Table 1 California’s covered emissions (historical and forecast for 2020 and 2021) by sector  
Table 2 Quebec’s covered emissions (historical and forecast for 2020 & 2021) by sector  
Table 3 California’s Expected Emissions for 2020 and 2021. 
Table 4 Quebec’s covered sector forecast for 2020 & 2021. 
Table 5 Summarizing the Covid Relief. 
Table 6 Summary of scenarios considered. 
Table 7 Summary of CarbonOutlookTM modeled scenario outputs. 
Table 8 Outlook for Offsets in the Likely Scenario. 
Table 9 Aggregated demand-supply gap (2021-30) million MtCO2e. 
Table 10 Tension ratios for the present model run. 
Table 11 Year when the ‘bank of allowances’ starts to get depleted. 
Table 12 Summary of 2050 scenarios considered.
Table 13 Summary of 2050 CarbonOutlookTM modeled scenario outputs. 

Figure 1. 1   California’s trend of reductions in covered emissions versus the state’s allowance budget 
Figure 1. 2 Quebec’s trend of reductions in covered emissions versus the state’s cap on emission units 
 
Figure 2. 1 Decoupling California’s Emissions from GDP (Billion USD). 
Figure 2. 2 California’s Emissions Intensity: Kg CO2e per Dollar GSP. 
Figure 2. 3 Quebec’s Emissions and GDP (Billion CAD). 
Figure 2. 4 Quebec’s Emission Intensity: Kg CO2e per unit GDP (CAD). 
Figure 2. 5 California’s covered emissions trend (2015-2021(E)). 
Figure 2. 6 Quebec’s covered emission trend (2015-2021(E)). 

Figure 3. 1 California’s Forecast for 2020 & 2021; YoY Change by Sector. 
Figure 3. 2 California’s Forecast for 2020 & 2021; YoY Percentage Change by Sector  
Figure 3. 3 California’s Forecast for 2020 & 2021; YoY Change. 
Figure 3. 4 California’s Overall Emissions: includes covered and non-covered emissions  

Figure 4. 1 Top five Emitters: Transportation Fuels. 
Figure 4. 2 Taxable Gallons of Motor Vehicle Fuel by organization. 
Figure 4. 3 Share of Motor Vehicle Fuel distributors in 2019. 
Figure 4. 4 Overall Change in Emissions (M Mt CO2e): Transportation Fuels. 
Figure 4. 5 Absolute Emissions for 2019, 2020, 2021: Transportation Fuels. 
Figure 4. 6 Percentage change in 2020 Fuel Volumes by Fuel Type. 
Figure 4. 7 YoY change in 2020 Fuel Volumes by Fuel Type. 
Figure 4. 8 Fuel Volumes by Fuel Type: Alternative Fuels. 
Figure 4. 9 Impact of COVID on Monthly Fuel Sales in California (Gallons). 
Figure 4. 10 California Diesel Fuel Production. 
Figure 4. 11 California Transportation Emissions Forecast 2020 and 2021. 
Figure 4. 12 Top five Emitters: Natural Gas Suppliers. 
Figure 4. 13 Percentage Change in Emissions: Transportation Fuels. 
Figure 4. 14 Absolute Emissions: Suppliers of Natural Gas. 
Figure 4. 15 Natural Gas Consumption: Residential Consumers. 
Figure 4. 16 Natural Gas Consumption: Industrial consumers. 
Figure 4. 17 Annual Natural Gas Consumption: Residential Users. 
Figure 4. 18 Annual Natural Gas Consumption: Industrial Customers. 
Figure 4. 19 Annual Gas Consumption: All consumer types (including vehicle fuel)  
Figure 4. 20 Sector forecast 2020,2021: Natural Gas Suppliers. 
Figure 4. 21 Percentage Change in Emissions: Refineries and Hydrogen Plants  
Figure 4. 22 Absolute Emissions: Refineries and Hydrogen Plants. 
Figure 4. 23 Top 5 Emitters: Refineries and Hydrogen Plants. 
Figure 4. 24 Monthly Refinery Inputs. 
Figure 4. 25 California Monthly Gasoline Production. 
Figure 4. 26 California Monthly Diesel Production. 
Figure 4. 27 Sector forecast 2020,2021: Refineries and Hydrogen Plants. 
Figure 4. 28 California Total Crude Oil Production. 
Figure 4. 29 California Total Natural Gas Marketed Production. 
Figure 4. 30 Percentage Change in Emissions (M Mt CO2e): Oil and Gas Production   
Figure 4. 31 Absolute Emissions: Oil and Gas Production. 
Figure 4. 32 California Natural Monthly Marketed Production. 
Figure 4. 33 Top five Emitters: Oil and Gas Production. 
Figure 4. 34 Sector forecast 2020,2021: Oil and Gas Production. 
Figure 4. 35 Percentage Change in Emissions: Fossil Fuel Electricity Generation   
Figure 4. 36 Absolute Emissions: Fossil Fuel Electricity Generation. 
Figure 4. 37 California Annual Electricity: In-state and Imports. 
Figure 4. 38 California Annual In-state Generation: All Renewables and Natural Gas  
Figure 4. 39 California Annual Electricity Imports: Coal, Nat Gas and All Renewables  
Figure 4. 40 Top five Emitters: Fossil Fuel Electricity Generation. 
Figure 4. 41 Sector forecast 2020,2021: Fossil Fuel Power Generation. 
Figure 4. 42 Percentage Change in Emissions: Electricity Imports. 
Figure 4. 43 Absolute Emissions: Electricity Importers. 
Figure 4. 44 Top five emitters: Electricity imports. 
Figure 4. 45 Historical Imports of Electricity (GWh) by source. 
Figure 6. 1 Quebec Covered Emissions YoY Change by Sector: 2020 & 2021. 
Figure 6. 2 Quebec Covered Emissions YoY Percentage Change by Sector: 2020 & 2021  
Figure 6. 3 Trajectory of Quebec’s Covered and non-covered emissions. 
Figure 7. 1 Percentage Change in Emissions: Transportation. 
Figure 7. 2 Absolute Emissions: Transportation. 
Figure 7. 3 COVID impact on Quebec Gasoline Sales: Monthly sales. 
Figure 7. 4 Quebec Annual Crude Oil Production. 
Figure 7. 5 Quebec Emissions Forecast: 2020 & 2021. 
Figure 7. 6 Quebec Natural Gas distribution by consumer type. 
Figure 7. 7 Quebec Natural Gas Distribution Monthly: Commercial and institutional 
Figure 7. 8 Quebec Natural Gas Distribution Monthly: Industrial consumers  
Figure 7. 9 Quebec Natural Gas Distribution Monthly: Residential consumers  
Figure 7. 10 Sectoral emissions – Present Trajectory (Mt  Co2e). 
Figure 7. 11 Sectoral emissions – Climate Goals met (Mt Co2e).
Figure 7. 12 Sectoral emissions – Off the Rails (Mt CO2e). 
Figure 7. 13 Stock of Clean Fuel Vehicles in California 2010-2020. 
Figure 7. 14 Light vehicle distribution by fuel type in California 2020. 
Figure 7. 15 HDV distribution by fuel type in California. 
Figure 7. 16 Electricity (GWh) consumed by EVs till date in California. 
Figure 7. 17 Additional Electricity demand by EVs in the likely scenario. 
Figure 7. 18 Transportation emissions and additional electricity emissions due to Passenger EVs in the state of California (Likely scenario). 
Figure 7. 19 Count of entities using x% of offsets and their respective emissions  
Figure 9. 1 Present Trajectory: California and Quebec Emissions compared with the WCI Cap (data till 2019 is actual)  
Figure 9. 2 Demand supply gap for the different scenarios (All figs in Mt CO2e)  
Figure 10. 1 Balances in entity and jurisdiction accounts (Present Trajectory Scenario)  
Figure 10. 2 Value of allowances auctioned and offsets bought across different scenarios  
Figure 10. 3 Sectoral Emissions Present Trajectory (Mt CO2e). 
Figure 10. 4 Sectoral Emissions Climate Goals Met (Mt CO2e). 
Figure 10. 5 Sectoral emissions – Off-the-rails (Mt CO2e). 
Figure 10. 6 Present Trajectory: California and Quebec Emissions compared with the WCI Cap to meet 2050 goals 
Figure 10. 7 Demand supply gap for the different scenarios till 2050 (All figs in Mt CO2e) 
Figure 11. 1 Forecasted CCA prices till 2050 for different scenarios.
Figure 12. 1 Timing for reserves drawn down and other instruments in the different scenarios (All figs in Mt CO2e)  

Contact Information

Anant Jain

Analyst

CaliforniaCarbon

insights@CaliforniaCarbon.info