November 4, 2015 by Rahul Rana
CaliforniaCarbon.info, November 5, 2015: According to data released by the California Air Resources Board (ARB), emissions from sectors covered under the second compliance period (2015-17) of the California cap-and-trade program fell by 1.6% in 2014, to 342,809,374 tCO2e. This is in line with the CaliforniaCarbon.info 2030 emissions forecast model, which estimated 2014 covered emissions at 342,340,720 MTCO2e, missing the mark by 0.1%.
CP1 leaves California oversupply of at least 34.5 million
Covered emissions for the first compliance period (2013-14) increased marginally in 2014 to 146,120,333, 0.77% up on 2013’s total of 144,999,976. Californian entities were hence required to submit allowances and offsets to cover a total of 291,120,309 tCO2e across the first compliance period, with an additional 36,664,703 instruments required of covered entities from Quebec. 322,181,742 V2013 and V2014 allowances were held in the various compliance and holding accounts at the end of the third quarter of 2015, in addition to 2,040,026 non-vintage early action allowances from Quebec.
Furthermore, entities may use offsets and true-up allowances to meet a portion of their obligations. Last year, 1,687,432 offsets and 1,758,738 true-up V2015s were surrendered. This leaves a carry-over long position of 34.5 million at the end of the first compliance period, in addition to whatever amount of offsets was used for this month’s surrender. As has been reported in various channels, the biennial surrender fell short of 100% compliance by some 500,000 tCO2e. As a penalty for non-compliance, instruments equal to 2,000,000 tCO2e need to be surrendered by mid-December this year, which could slightly shorten the stated oversupply.
Sector-wise breakdown of 2014 emissions
Transport fuel suppliers, the sector with the largest share of 2014 emissions, reported emissions totaling 154,892,070 tCO2e, a slight decline of 0.74% from 2013. The largest decline was seen in the natural gas supply sector, which reduced emissions by 11.87% to 41,796,209 tCO2e. Three sectors registered increases: oil & gas production by 13.01% to 16.3 MMTCO2e; cement by 6.35% to 7.65 MMTCO2e; and other combustion sources by 3.66% to 8.32 MMTCO2e
“The trends in these emissions suggest California is on a path to de-couple economic growth and emissions,” says Chandan Kumar, an economist at Climate Connect who built CaliforniaCarbon.info’s 2030 WCI carbon forecast model based on energy consumption trends in California and Quebec, “Increased uptake of renewable energy and decline in natural gas consumption, as well as the marginal decline in transport fuel consumption in California, resulted in lower emissions in 2014.”
CaliforniaCarbon.info expects covered emissions to decline by 1.0% to some 338.9 MMtCO2e in 2015 and by a further 6.0% to 322.2 MMtCO2e in 2020. Under the base case assumptions, CaliforniaCarbon.info estimates that the oversupply being built up in the WCI carbon market would not be fully eroded until 2027.
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