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Environmental groups are opposed to California’s GHG proposal. More than 160 environmental groups have urged California to revise its climate plan, claiming that it depends too heavily on "industry scams" such as carbon trading to reach its targets. The organizations encouraged the California Air Resources Board (CARB) to abandon their draft scoping plan in favor of a more aggressive one that would aim for "near zero" greenhouse gas (GHG) emissions by 2035, ten years earlier than the agency had recommended. They claim that the existing plan does not effectively address climate and environmental justice challenges. To accomplish this, the organizations advocate for the phase-out of fossil fuel production, the transition to 100 percent renewable electricity, and the requirement of 100 percent electric vehicle sales by 2030. They also advocated for the abolition of the state's cap-and-trade program and the Low Carbon Fuel Standard (LCFS), which they claim delay much-needed emissions cuts and undermine environmental justice in other states and countries.
Updates on the California carbon market are sought. Several stakeholders under the International Emissions Trading Association (IETA) have urged the California Air Resources Board (CARB) to revise its proposed climate scoping strategy so that it relies less on direct emissions restrictions and more on the cap-and-trade program. The association also advised that the agency set new restrictions for the program so that it reaches net-zero by 2045 and includes a mechanism for accounting for negative technologies and approaches. Also, the Western States Petroleum Association (WSPA) urged CARB to depend less on direct measures and technology mandates. It urged CARB to continue the cap-and-trade program beyond 2030 and to allow credit creation from zero-emission projects. According to WSPA, crediting such projects through the carbon market will encourage the deployment of carbon capture and storage (CCS) and CO2 removal technology. A requirement for these technologies, according to the group, would undermine the state's efforts. Pacific Gas and Electric (PG&E), on the other hand, urged CARB to adopt its LCFS-developed CCS protocol and to begin cap-and-trade regulations in 2023, with the goal of extending the program beyond 2030. CARB is working on an update to its scoping plan, which outlines the steps the state will take to fulfill its GHG-reduction targets. The state aims for a 40% reduction by 2030 and carbon neutrality by 2045. The public comment period on the agency's draft plan ended, and the final plan is expected to be adopted this autumn.
The California carbon market supply bill is moving forward. On June 20, the California Assembly Natural Resources Committee voted 7-3, along party lines, in favor of SB 1391, which would compel the California Air Resources Board (CARB) to conduct a three-year evaluation of market supply dynamics and take action if issues arose. Before a possible floor vote, the bill now heads to the Assembly Appropriations Committee. Senator Sydney Kamlager, the bill's sponsor, has stated that she hopes the legislation would be put to a vote after the legislature returns from its July recess. The legislative session for this year will end on August 31.
California issues on 21 June mine methane offsets. The California Air Resources Board issued on 22 June 113,636 California Carbon Offsets (CCOs) in its latest round of new credits. These all went to methane capture projects that are out-of-state. CARB granted Keyrock Energy about 66,000 CCOs for two facilities that absorb and flare methane from coal mines. More than 55,000 CCOs were awarded to a project at Beaver Coal's Pocahontas mine in Crab Orchard, West Virginia, while more than 10,000 CCOs were awarded to a comparable project at Hallador Energy's Oaktown Mine 2 in Oaktown, Indiana. Nearly 48,000 of the remaining offsets went to Vessels Carbon Solutions for a project to capture and use methane from an abandoned ArcelorMittal USA coal mine. The methane captured is sold to a local natural gas provider. A portion of the methane is used to create electricity for the site.
Canada establishes a federal carbon offset program. On June 8, Canada started its long-awaited government carbon offset system, providing another compliance option for companies covered by the country's industrial CO2 emissions program and potentially providing a new source of credits to be used toward voluntary climate commitments. The government finalized offset regulations, including general requirements for credits and their use by industrial facilities subject to the country's output-based pricing system (OBPS), as well as a credit tracking system. According to Canadian officials, the program will assist the country in meeting its climate policy goals while also offering new revenue opportunities for local governments, farmers, and businesses. The carbon reductions must take place in Canada and assist the country reach its climate policy goals, particularly its commitments under the Paris climate agreement. By 2030, Canada seeks to decrease its greenhouse gas (GHG) emissions by 40-45 percent from 2005 levels. The final standards, which have been in the works for approximately three years, closely resemble those suggested by Environment and Climate Change Canada (ECCC) last year. However, the government has chosen to allow the creation of protocols for non-biological sequestration projects, such as direct air capture of CO2. To avoid conflict with existing provincial programs, such as those in Alberta, British Columbia, and Quebec, federal protocols cannot be used for new initiatives in a province that already has a protocol in place for the same activity.
California:
Issuance |
ODS |
Livestock |
U.S. Forest |
Urban Forest |
MMC |
Rice Cultivation |
Total |
May '22 |
24,794,570 |
8,449,580 |
195,238,098 |
0 |
9,163,742 |
0 |
237,645,990 |
June '22 |
24,794,570 |
8,449,580 |
195,293,417 |
0 |
9,291,566 |
0 |
237,829,133 |
Delta |
0 |
22,285 |
55,319 |
0 |
127,824 |
0 |
183,143 |
Quebec:
Issuance |
ODS |
Livestock |
U.S. Forest |
Urban Forest |
MMC |
Rice Cultivation |
Total |
May '22 |
578,785 |
0 |
0 |
473,615 |
0 |
0 |
1,052,400 |
June '22 |
578,785 |
0 |
0 |
473,615 |
0 |
0 |
1,052,400 |
Delta |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
Offset Pricing as of July 6th, 2022:
Allowance pricing as of July 6th, 2022: $30.04– Vintage 2022, July 2022 Delivery
The average daily price in June 2022: $30.82 – Vintage 2022
2021 Average Daily Price: $22.99 per ton | 2022 Average Daily Price: $29.82 per ton |
2021 Highest Daily Price: $35.14 per ton (November 15th, 2021) | 2022 Highest Daily Price: $33.48 per ton (January 1st, 2022) |
Questions? Contact our team for more information: environmental@aegis-hedging.com
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