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News Update
Offsets Update
- ARB has issued an overall 481,109 carbon offsets in February 2022
- 171,245 issued on February 9th
- 309,864 issued on February 23rd
- 204,621 of the CCOs issued are listed as DEBs
- On February 9th ARB cut down the invalidation period from eight years to three years on 60,380 credits, the total being 136.88 mln
- On February 23rd ARB cut down the invalidation period from eight years to three years on 136,125 credits, the total being 137.02 mln
- 233.86mln offsets have been issued since inception by ARB and Quebec
- 11.04 mln carbon offsets have been issued by registries that have not yet been approved by ARB. Among them are a 1.80 mln credits issued for a forestry project in April 2020, 1.43 mln credits that were issued for a forestry project in April 2020, and .76 mln credits that were issued for a forestry project in February 2022.
- 137,023,831 offsets have been issued for all CCO3s
- 126,969,821 offsets have been issued for CCOs with no invalidation risk left
- 1,052,400 Quebec offsets have been issued in total; 0 credits issued in February 2022
California
Issuance
|
ODS
|
Livestock
|
U.S. Forest
|
Urban Forest
|
MMC
|
Rice Cultivation
|
Total
|
January ‘22
|
24,390,793
|
8,257,719
|
190,683,975
|
0
|
8,994,364
|
0
|
232,326,851
|
February '22
|
24,585,936
|
8,375,930
|
190,851,730
|
0
|
8,994,364
|
0
|
232,807,960
|
Delta
|
195,143
|
118,211
|
167,755
|
0
|
0
|
0
|
481,109
|
Quebec
Issuance
|
ODS
|
Livestock
|
U.S. Forest
|
Urban Forest
|
MMC
|
Rice Cultivation
|
Total
|
January ‘22
|
578,785
|
0
|
0
|
473,615
|
0
|
0
|
1,052,400
|
February '22
|
578,785
|
0
|
0
|
473,615
|
0
|
0
|
1,052,400
|
Delta
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Offsets Pricing
Offset Pricing as of March 8th, 2022:
- California Carbon Offset (CCO3) - (3 years of Buyer Liability) $15.25
- Guaranteed California Carbon Offset (CCOs) – Spot Delivery $16.05
- California Carbon Offset (CCO3 - DEB) - (3 years of Buyer Liability) $16.60
- Guaranteed California Carbon Offset (CCOs- DEB) – Spot Delivery $17.40
ARB Schedule
- 03/01/2022 Opt-in to Cap-and-Trade Program for 2023 Compliance Year deadline
- 03/04/2022 Auction Consignment deadline (May 2022 Joint Auction)
- 03/09/2022 California Carbon Offsets issued
- 03/23/2022 California Carbon Offsets issued
- 03/18/2022 Auction Notice posted (May 2022 Joint Auction)
- 04/13/2022 California Carbon Offsets issued
- 04/27/2022 California Carbon Offsets issued
California Carbon Allowances (CCA)
- Allowance pricing as of March 8th, 2022: $24.55– Vintage 2022, March 2022 Delivery
- The average daily price in February 2022: $28.33 – Vintage 2022
Market Update
- Prices dropped 29% from January 1st, 2022, at $33.50 to intraday low of $23.80 on March 7th, 2022. Compliance entities have seen this as buying opportunity especially March 4th thru March 9th. Prices currently trading at $26.30.
- KraneShares Carbon ETFs (both ETFs) which increased holdings to over 18.5 million California allowances as of February 14th, 2022, saw a rare monthly pullback to 16.85 million California allowances as of March 8th, 2022. The pullback in prices caused investors to reduce capital invested in these ETFs. AEGIS expects rising prices may increase the holdings to all-time highs later in 2022.
- The 2023 auction floor price would be $22.16 based on recent CPI reading was 7.5%. Market participants are keeping this in mind when discussing the recent lows.
- AEGIS believes the recent price drop will prove to be an attractive price for compliance entities looking to hedge 2021-2023 shortfalls.
Figure 1. Open Interest on the Intercontinental Exchanges (ICE) - Vintages 2017-2023
Figure 2. CCA Daily Transactions (Spot Contract - 1/1/2018 to Present)
2021 Average Daily Price: $22.99 per ton |
2022 Average Daily Price: $29.40 per ton |
2021 Highest Daily Price: $35.14 per ton (November 15th, 2021) |
2022 Highest Daily Price: $33.48 per ton (January 1st, 2022) |
Figure 3. CCA Daily Transactions (Spot Contract - 1/1/2022 to 3/8/2022)
Questions? Contact our team for more information: environmental@aegis-hedging.com
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EACH CLIENT MUST RELY ON ITS OWN EVALUATION OF THE SUBJECT MATTER PRESENTED IN THIS DOCUMENT. THIS DOCUMENT IS NOT TO BE CONSTRUED AS INVESTMENT, LEGAL, OR TAX ADVICE OF ANY KIND.