Offset Scorecard: New projects provide fresh volume as CCO prices reach new heights

April 13, 2017 by Billy Hamshaw

(CaliforniaCarbon.info, April 13, 2017) 1.2 million carbon offsets passed ARB’s approval this week, the largest issuance so far this year. The credits were distributed across 10 new projects and 5 subsequent reporting periods.

In 2016 average issuance volume hovered around the 800K mark. This year issuances have averaged just over 400K. As seen by the figure below, however, the final quarter of the year has historically been the most productive in terms of fresh CCO volume.

CCO vol

Usal Redwood Forest IFM project (CAR1139) was the highest scorer of the week, generating 307,000 forestry credits in Mendocino County, CA. The Usal Redwood Forest Company has been the fourth largest supplier of forestry credits, gaining 3.9 million credits through the Early Action protocol.

Forest Carbon Partners’ Gabrych Ranch IFM (CAR1104) was the second latest forestry project to be credited under the state’s cap-and-trade program. Also based in California, the project picked up 287,000 credits, 55,119 of which will be held in the buffer pool for insurance purposes.

With a high volume of forestry credits in the pipeline and large backlog of projects listed, we anticipate forestry credits to continue to dominate supply in the short to medium term.

Spruce Haven Farm COP (CAR1184) and TMF Biofuels Dairy Digester (CAR1169) were the most recent additions to the list of credited livestock projects. As lawmakers continue to discuss the merits of introducing a cap-and-trade system in Oregon, TMF Biofuels Dairy Digester (CAR1169) has become the first credit project listed in the state.

ODS credits accounted for 468k of this week’s CCO issuances. A-Gas Americas 2017-1 (CAR1249), Coolgas 2016-4 (CAR1248) and DPC Domestic ODS Destruction Project #27 (CAR1243) gained credits from the destruction facility in Ohio while Tradewater ODS 4 (ACR363) and EOS ACR357 (ACR357) landed 91K and 84K respectively in El Dorado, Arkansas.

One new Mine Methane Capture project, Baker Mine AMM (ACR342), also passed ARB’s final approval this week, earning a slim 2,236 credits for Wabashco. CaliforniaCarbon.info’s 2030 offset supply forecast anticipates volumes from Mine Methane Capture to rise over the coming years, with real potential for improved technical, financial and regulatory efficiency, bringing more volume to the market.

In other news, just under 5 million CCO8s transitioned into the lower risk CCO3. 3.9 million credits from the early action project, Usal Redwood Forest (CAR730), formed the bulk of the fresh CCO3 influx whilst 852K offsets from Goodman Forest (ACR202) also qualified as a result of a different verification body assigned to validate the issuance of credits from its most recent reporting period.

As it stands, CCO3s account for 17.9 million of the 57.4 million offsets generated under the offset program. 6.8 million of these credits have surpassed their invalidation timeframe, qualifying for the zero risk CCO-0 status.

In light of the last week’s positive court hearing that ruled in favour of ARB, California Carbon Allowance (CCA) prices surged to new heights, reflecting a new lease of confidence in the market. Breaking the usual longer term correlation trends observed with CCA prices, CCO prices are up over half a US dollar than this time last week based on quoted broker prices.

ARB’s next issuances will take place later this month on the 27th.

Billy Hamshaw (billy@californiacarbon.info)

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