More than two years after the latest large legislative change in the WCI, the introduction of Assembly Bill 398 segregating offset credits into DEBs and non-DEBs, the market slowly settles into a new stage of maturity. Yet, new developments within and without the market continue influencing expectations: as outlined in the AB32 Climate Change 2022 Scoping Plan, the California Air Resource Board appears set to introduce a more stringent emissions cap that aims to take emission levels 48% below 1990s levels by 2030, as opposed to the former 40%. On top of this, 2023 is going to be the first year in the history of the WCI where state-wide emissions surpass the emission cap. Increased demand in the voluntary carbon markets for high-quality offset credits is turning project developers formerly only selling on the compliance market towards voluntary purchasers. The recent launch of the Washington market is also bound to create increased demand for offset credits, even if the linkage of the two markets do not materialise by the end of the decade.

After thoroughly exploring supply and demand scenarios broken down by the DEBs/non-DEBs demarcation, we arrived at the conclusion that the WCI market will likely face a severe shortage of DEBs offset credits by 2030. Our biggest contribution to the discourse is to demonstrate that steeply rising CCA prices coupled with a severe supply crunch will do much to drive CCO DEBs prices up sharply over the rest of the decade.

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