WCI market: CCA volumes surge post-auction as offset queue lengthens

Published 00:41 on September 5, 2015  /  Last updated at 20:58 on September 6, 2015  /  Americas, US  /  No Comments

Front-year California carbon prices pulled back slightly in a week of relatively high liquidity that brokers said was characteristic of the period immediately following the WCI’s quarterly auctions.

Front-year California carbon prices pulled back slightly in a week of relatively high liquidity that brokers said was characteristic of the period immediately following the WCI’s quarterly auctions.

Prices had little support – and remained rangebound – despite the fact that more than 15 million tonnes of Vintage 2015 changed hands on ICE during the week. Dec-15 units shed 3 cents week-on-week to settle at $12.72 on Thursday, while Sep-15 units fell 7 cents to $12.63 even as volumes surged.

An early-week flurry of trading boosted prices for Vintage 2018, but Dec-15 deliveries for that contract finished the week up just two cents at $12.65.

EARLY ACTION QUEUE

The backlog of carbon offsets in California’s early action project pipeline grew by about 656,000 credits this week after the state’s Air Resources Board (ARB) listed three new projects representing nearly 350,000 tonnes worth of offsets. Nearly all the new offsets stem from coal mine methane projects operated by Vessels Coal & Gas and Blue Source.

Existing projects represented another 337,000 offsets added to the early action list, with Keyrock Energy’s Corinth abandoned mine methane project accounting for the majority.

Two projects already appearing on the list and representing nearly 53,000 offsets were fully verified, according to documents filed with ARB. Another 227,000 tonnes achieved three-year invalidation status, compared with the typical period of seven years.

Offset project developers are required to list early action projects with ARB by end of this month in order for associated credits to be considered as compliance instruments in California’s market.

The latest additions leave ARB’s early action backlog at nearly 9 million credits, which the agency must approve by a mandated August 2016 deadline.

ARB has said it expects to clear the pipeline this autumn, a claim meeting with scepticism among industry participants. The agency is scheduled to post additional offset issuances – including those from early action projects – on Sep. 9.

BILLS ADVANCE

Three bills impacting California’s ETS continue to progress through the state’s legislature after receiving resounding approval during appropriations committee votes last week.

An Assembly bill (AB 1288) that would indefinitely extend the scheme beyond a 2020 sunset was this week ordered to a third reading before the full state Senate – one of the final steps ahead of a full floor vote.

In the state’s Assembly, a Senate bill (SB-32) authorising ARB to draw up plans to reduce statewide carbon emissions to 40% below 1990 levels by 2030 was amended and ordered to a third reading – as was another bill (SB-350) that would increase the state’s renewable portfolio standard to 50% by 2030.

All three bills are on course to be passed by lawmakers before the legislature adjourns the current session on Sep. 11. California Governor Jerry Brown – key proponent of the legislation – is expected to sign the bills into law in October.

By Robert Mullin – news@carbon-pulse.com

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