Carbon Offsets Shortage in California Likely for the Middle of the Decade
WCI Offsets Market Review & Outlook till 2030: Supply and Demand Dynamics After AB 398 of California Offsets
CaliforniaCarbon.info’s updated 2021 WCI Offsets Outlook: Outlook for DEBs & Non-DEBs provides detailed insights into current offset market dynamics. It also builds a 2030 forecast for net supply-demand and prices as the markets splits into DEBs and Non-DEBs after the controversial AB398 ruling.
AB 398 stated half of surrendered offsets need to have Direct Environmental Benefits to California. This has driven a wedge into the well-established offsets market and will effectively split into two sub-markets - each with its own supply dynamics and price schedule.
The report finds that DEB offsets are likely to be in shortage over the second half of the decade. This will impact all compliance entities and will alter the business decisions of all offset developers, verifiers, and other stakeholders. The market is steadily pricing this in; a small price split has already been observed by brokers, but the total effect of the ruling has still not yet been felt, nor fully appreciated. This report provides some much-needed clarity and quantitative analysis.
The insights on this report are grounded in CCI’s unrivalled offsets database, and are augmented by results from an exclusive WCI market survey portraying current insider perspectives. Historic offset generation and usage is broken-down into key entity-level detail for both California and Quebec. These past trends are then extrapolated into forward scenarios that account for both the decrease in the regulated offset limit, and net supply and demand of DEBs and Non-DEBs offsets.
Anyone wishing to understand the WCI market and its future needs a clear a picture as possible of the offsets program. This report’s analysis and research is the next step on that journey of understanding.
To learn more:
https://go.californiacarbon.info/2021WCIOffsetMarketReviewOutlook
Contact
Utkarsh Akhouri
insights@CaliforniaCarbon.info
Table of Contents
The Market for DEBs Offsets
1 Introduction: Context for offsets in California
1.1 California’s ambitious climate goals led to the setting up of cap-and-trade program
1.2 Compliance offset program is a cost-containment tool
1.3 Current Market Sentiment
2 Offset Supply Dynamics
2.1 Total historic offsets supply: In-State & Out-of-State
2.2 Historic annual offsets supply: In-State & Out-of-State
2.3 Historic offsets supply: DEBs and Non-DEBs
2.4 Breakdown of Offset Projects: Protocol Type
2.5 Lead-times for Offset Generation: Protocol Type
2.6 Proportion of Offset Generation: Invalidation Period & Registries
3 Offset Usage Dynamics
3.1 Offset usage behavior: Emissions and offset usage
3.2 Offset usage behavior: CP1 & CP2
3.3 CP1’s Largest Offset Projects and Buyers
3.4 CP2’s Largest Offset Projects and Buyers
3.4 Quebec Offset usage
3.5 Invalidation Timeframes and CCO prices in CP1
3.6 Invalidation Timeframes and CCO prices in CP2
4 Scenario Analysis
4.1 Scenarios Considered
4.2 Demand-side Scenarios
Compliance Continuity (D1)
Maximum Offset Usage (D2)
4.3 Supply-side Scenarios
Without Re-entry (S1)
With Re-entry (S2)
4.4 Scenario Analysis: Demand-side
4.5 Scenario Analysis: Supply-side
4.5.1 Non-DEBs Market Supply Forecast
4.5.2 DEBs Market Supply Forecast
4.6 Net Demand-Supply analysis for all scenarios
5 Pricing Signals for Offsets until 2030
5.1 Assumptions and Methodology
5.2 Baseline CCO Price Forecast
5.3 DEBs and non-DEBs Forecast
6 Key Takeaway and Outlook
List of data Sources
List of Figures
Figure 1 Total historic in-state and out-of-state supply
Figure 2 Type of protocol: In-State and Out-of-State
Figure 3 Type of CCOs: In-state and Out-of-State
Figure 4 In-state and out-of-state supply by calendar year
Figure 5 In-state and out-of-state supply by vintage year
Figure 6 Percentage of DEBs and non-DEBs credits in the current offset market
Figure 7 In-state and out-of-state supply of DEBs
Figure 8 Distribution of out-of-state DEBs credits
Figure 9 Percentage of total offset credits by protocol type
Figure 10 Count of projects by protocol type
Figure 11 CCOs by top 15 project developers by protocol type
Figure 12 Breakdown of lead times by protocol type (Source: CaliforniaCarbon.Info)
Figure 13 Avg. lead time from first reporting period start date to CCO issuance date in 2013 and 2020
Figure 14. Total number of credits by invalidation period and protocol type (Source: CaliforniaCarbon.Info)
Figure 15 Total number of credits by registry and protocol type
Figure 16 Offset generation by registries: CAR, ACR and VCS
Figure 17 - CP1 and CP2, Offset Usage vs Total Surrender and 8% Limit
Figure 18 - Count of entities using x% of offsets and their respective share of emissions
Figure 19 CP1 & CP2 offsets surrender (Source: CaliforniaCarbon.Info)
Figure 20 Top 10 entities and their offset surrender in CP1 (Source: CaliforniaCarbon.Info)
Figure 21 Top 10 entities and their offset surrender in CP2 (Source: CaliforniaCarbon.Info)
Figure 22 CCOs available in CP1 vs. CCOs used by top entities (Source: CaliforniaCarbon.Info)
Figure 23 Breakdown of CCOs used by largest entities in CP1 (Source: CaliforniaCarbon.Info)
Figure 24 CCOs available in CP2 vs. CCOs used by top entities (Source: CaliforniaCarbon.Info)
Figure 25 Breakdown of CCOs used by largest entities in CP2 (Source: CaliforniaCarbon.Info)
Figure 26 Offsets surrendered in CP1 vs. offsets issued in CP1
Figure 27 Entities that used offsets in CP1
Figure 28 Total offsets surrendered in CP1 and CP2
Figure 29 Offsets surrendered in CP2 vs. offsets issued in CP2
Figure 30 Top Quebec offset users in CP2
Figure 31Quebec entities offset surrender vs. California entities offset surrender
Figure 32 State-wise CCOs surrendered in CP2
Figure 33 CCOs surrendered by vintage
Figure 34 Canadian projects surrendered in CP2 by vintage
Figure 35 Offset credits by issuance year
Figure 36 Breakdown of invalidation period by protocol type under CP1
Figure 37 CCO-3 and CCO-8 pricing between 2013-2014
Figure 38 Breakdown of invalidation period by protocol type under CP2
Figure 39 CCO-3 and CCO-8 pricing between 2015-2017
Figure 40 Carbon Offset Demand for the period CP3 – CP7 for Compliance Continuity scenario
Figure 41 Carbon Offset Demand for the period CP3 – CP7 for Maximum Offset usage
Figure 42 Difference in demand for the two demand-side scenarios
Figure 43 Non-DEBs Ozone Depletion Substances (ODS) credit supply 2015-2030
Figure 44 Non-DEBs Livestock Credit supply 2015 – 2030
Figure 45 Non-DEBs Mine Methane Capture protocol credit 2015-2030
Figure 46 Non-DEBs Forestry protocol cumulative credits 2015-2030
Figure 47 DEBs ODS Credits
Figure 48 DEBs Livestock Credits
Figure 49 DEBs Forestry Credits without Re-entry (S1)
Figure 50 DEBs Forestry Credits with Re-entry (S2)
Figure 51 Net CCOs available for Non DEBs Market CP4-CP6
Figure 52 Net CCOs available for DEBs project CP4-CP6 (with re-entry of forestry project)
Figure 53 Net CCOs available for DEB projects in CP4-CP6 period (with re-entry of offset project)
Figure 54 Baseline CCO Price Forecast, 2021-2030
Figure 55 DEBs vs non-DEBs Price Forecast, 2021-2030
( Press Release Image: https://photos.webwire.com/prmedia/39961/275924/275924-1.jpg )
WebWireID275924
- Contact Information
- Utkarsh Akhouri
- Analyst
- CaliforniaCarbon
- Contact via E-mail
This news content may be integrated into any legitimate news gathering and publishing effort. Linking is permitted.
News Release Distribution and Press Release Distribution Services Provided by WebWire.