CCO-8 Issuances 

Source: California Air Resources Board (CARB) 

On the 22^nd of August, the California Air Resources Board (CARB) issued 396,659 California Carbon Offset (CCO) credits, a sharp decrease from two weeks ago. The largest issuance was made by a non-DEBs MMC project located in Illinois and operated by Keyrock Energy, LLC. Of the 16 projects to have made an issuance this time round, only one, a livestock project operated by Philip Verwey Farms, provided direct environmental benefits. In its sixth round of issuances, this project contributed a decent 53,995 offsets credits to the ARB’s registry.  

CCO-3 Issuances 

Source: California Air Resources Board (CARB) 

399,909 credits from six distinct projects (five MMC and one livestock) have seen their invalidation periods reduced from eight to three years. The only one to provide direct environmental benefits to the state of the California was the livestock project – specifically, the one that made the only CCO-8 issuance this time round also.

CCO-0 Conversions 

Source: California Air Resources Board (CARB) 

Eight project issuances reached the end of their invalidation periods in August, adding 1,396,132 offset credits to the CCO Golden Pool, a significant increase of more than 75 times from the previous month. Of these, six conversions belong to forestry projects, all of which provided DEBs to the state of California. The remaining two conversions were for livestock projects, neither of which provided DEBs.  

Out of the six forestry project conversions, two represented the fourth and fifth batches of issuances of the same forestry project registered with ACR and operated by the Edward Miller Trust. Similarly, three other conversions belonged to the first three batches of issuances for a forestry project registered with the Climate Action Reserve (CAR) and operated by the Mailliard Ranch. 

Average CCO Prices (DEBs vs Non-DEBs)

Source: Numbers are an average of broker prices reported to CC.info 

CCO-0 DEBs are trading at $27.87, CCO-3 DEBs at $25.86, and CCO-8 DEBs, interestingly, at $25.99. The convergence of CCO-3 and CCO-8 prices indicate that buyers do not view invalidation risk as a significant threat to the credits they purchase – historically, a fair assessment. DEBs prices have increased from two weeks ago. On the other hand, CCO-0 non-DEBs have been on a slight downward trend for months which has not quite stopped, although prices have recovered after a half-year low in July. Those after non-DEBs credits will have to fork out between $17.75 and $18.33 for an offset, depending on their invalidation risks of choice. These prices mean that the credits are currently undervalued on the compliance market with the same credits generally fetching higher prices on the voluntary market. Oversupply of non-DEBs credits is the primary culprit to blame for this tendency. 

CCA vs CCO Discount Trend

Source: Numbers are an average of broker prices reported to CC.info 

CCA prices reached an all-time high at the end of July and then declined slightly last week. Due to the high CCA prices, the discount rate between CCAs and CCO DEBs has increased to 22.5%, compared to 17.9% two weeks ago. On the other hand, the present discount rate between CCAs and CCO non-DEBs has increased significantly to 49% from 44.3% two weeks ago.

Analyst Contact:

Eszter Bencsik (ebencsik@ccarbon.info)