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News Update
- California SB-253 & SB-261 advance, requires climate disclosures. California’s Senate Appropriations committee advanced two bills requiring businesses to disclose their GHG emissions and climate-related financial risk. SB-253 requires companies that do business in California and generate over $1B/year in revenue to publicly report their annual scope 1, 2, and 3 emissions. SB-261 requires companies that do business in California and generate over $500M/year in revenue to annually report their climate-related financial risks and related measures. The bills will go before the state Assembly for a hearing on July 10th.
- CARB to offer 63 million allowances in August auction. California Air Resources Board (CARB) released the notice for Joint Auction #36 dated August 16th, 2023. The current auction will offer 55,760,384 allowances and the advance auction will offer 7,577,000 allowances. The reserves prices for both auctions will remain at $22.21 for calendar year 2023.
- CITSS accounts increase to 807 through Q2 and backlog remains. CARB released their most recent CITSS Registrant Report on June 30th. The reported data shows California-registered CITSS accounts totaled 807 registrants in Q2, only 7 more than the 800 seen in Q1. However, there are still 346 companies that have applied for CITSS since July 2022 that have yet to see approval. ARB has previously stated they will not disclose the number of pending applications, deeming it to be market-sensitive information, so just how many of these 346 are truly waiting and how many have given up hopes of approval is unknown.
- ACR revises crediting methodology & guidelines. The American Carbon Registry released its newest version of the ACR Standard specifying updated requirements for the quantifying, monitoring, reporting, verification, registration, and issuance of project-based offset credits. Changes in version 8.0 include reducing period eligibility from 10 years from the project start date to 5 years, as well as clarification around the language not previously specified. The new version also provides developers a template for reporting project contributions to the UN Sustainable Development Goals (SDGs), and includes updates to the double counting section to align with UNFCCC Article 6 decisions on avoiding double counting.
- Intuit pledges net-zero GHG commitment. Intuit, a global financial tech company made up of subsidiaries TurboTax, Credit Karma, QuickBooks and Mailchimp, has pledged to reach net-zero GHG emissions by 2040. Intuit plans to reduce its Scope 1 and 2 emissions by 40% (from a 2022 baseline) by FY2030, and 90% by 2040. The company has yet to comment on its plans to purchase carbon offsets towards this pledge.
Offsets Update
- ARB has issued an overall 1,060,533 carbon offsets in June 2023.
- 245,471 issued on April 11th
- 815,062 issued on April 25th
- 493,830 of the CCOs issued are listed as DEBs
- 250 mln offsets have been issued since inception by ARB and Quebec.
- 1.5 mln Quebec offsets have been issued in total;
California:
Issuance |
ODS |
Livestock |
U.S. Forest |
Urban Forest |
MMC |
Rice Cultivation |
Total |
May '23 |
25,538,455 |
8,982,318 |
201,838,117 |
- |
11,450,060 |
- |
247,808,950 |
June '23 |
25,609,288 |
9,024,650 |
202,582,230 |
- |
11,509,297 |
- |
248,725,465 |
Delta |
70,833 |
42,332 |
744,113 |
- |
59,237 |
- |
916,515 |
Quebec:
Issuance
|
ODS
|
Landfills
|
Covered Manure Storage
|
Active Coal Mines
|
Active Underground Coal Mines
|
Total
|
May '23
|
674,777
|
636,257
|
- |
- |
- |
1,311,034
|
June '23
|
674,777
|
780,275
|
- |
- |
- |
1,455,052
|
Delta
|
-
|
144,018 |
- |
- |
- |
144,018
|
Offsets Pricing
Offsets Pricing as of July 11th, 2023:
- California Carbon Offset (CCO3) - (3 years of Buyer Liability): $17.90
- California Carbon Offset (CCO3 - DEB) - (3 years of Buyer Liability): $24.60
- Golden California Carbon Offset (CCOs) – Spot Delivery: $18.70
- Golden California Carbon Offset (CCOs- DEB) – Spot Delivery: $25.55
ARB Schedule
- 8/16/2023 - August 2023 Joint Auction #36
- 8/23/2023 - August 2023 Joint Auction #36 Summary Results
- 11/15/2023 - November 2023 Joint Auction #37
- 11/22/2023 - November 2023 Joint Auction #37 Summary Results
California Carbon Allowances (CCA)
- Allowance pricing as of July 11th, 2023: $32.00 – Vintage 2023, July 2023 Delivery
- Allowance pricing as of July 11th, 2023: $32.90 Vintage 2023, December 2023 Delivery
- The average daily price in June 2023: $31.53 – Vintage 2023
Market Update
- The average daily price in June 2023 was $31.53, which is a 3.17% increase compared to the average daily price of $30.56 in May 2023.
- Prices have trended up in early July hitting a high of $32.15 on July 5th, before trading back down to $32.00.
- All 56 million vintage 2023 and 2026 allowances were sold in the previous auction held in May, settling at $30.33 and $30.05 respectively.
- Krane Shares Carbon ETFs (both ETFs) held to 11.8 million shares on July 7th, 2023 compared to 13.1 million carbon allowances on June 1st, 2023 which was a 9.92% decrease. Furthermore, we are now 6.7 million or 36.2% off the all-time high of 18.5 million California allowances seen in February 2022.
- The market expects to continue recovering in 2023 as prices have trended higher. Recent legislative efforts to increase GHG reduction stringency will likely lead ARB to make additional adjustments to environmental programs to reach the state’s increasingly ambitious emissions targets. While the all-time high of $35.20 seen in November 2021 is still in the distance, pricing has trended upward, and will likely continue through the end of the year.
Figure 1. CCA Daily Transactions (Spot Contract - January 2022 to Present)
|
|
2022 Average Daily Price: $28.93 per ton |
2023 Average Daily Price: $29.80 per ton |
2022 Highest Daily Price: $33.50 per ton (January 1st, 2022) |
2023 Highest Daily Price: $32.15 per ton (July 7th, 2023) |
Questions? Contact our team for more information: environmental@aegis-hedging.com
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