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Offset Scorecard: Forestry projects dominate latest CCO issuances

September 9, 2015 by Rohan Nongpiur

CaliforniaCarbon.info, September 9, 2015: This week, California’s Air Resources Board (ARB), regulators of the state’s cap-and-trade program, have issued 828,792 offset credits (CCOs) to six qualifying GHG reduction projects, bringing the total issued so far to 23.77 million. Of the 828,792 CCOs issued, 671,179 were awarded to projects using ARB’s protocols, whereas 157,613 went to early action projects. The majority of today’s issuance was claimed by forestry projects, which will receive 825,124 CCOs minus a buffer deduction of 158,559. These latest developments mean 19.55 million CCOs can now be used for future cap-and-trade compliance.

However, this week’s developments saw no CCOs achieve three-year invalidation liability status, which means the number of CCO-3s in the program remains at 3,917,229. Adjusting for previous retirements and credits in the buffer, 3,498,088 CCO-3s remain available for future compliance use.

Blue Source forestry project credits for second reporting period

Blue Source’s Bishop Improved Forest Management Project (CAR973) will be receiving 147,666 CCOs for a second reporting period, which ran from June 2013 to June 2014. The first reporting period had received 2,163,951 CCOs in June 2014, of which 332,019 were retired against compliance obligations of several entities last year. With a total of 2,311,617 credits across both reporting periods, this is by far the largest project to have received CCOs under the ARB protocol. It is also the second forestry project to have CCOs issued for two reporting periods in the ARB compliance program, after the Yurok Tribe/ Forest Carbon partners CKGG Improved Forest Management Project (CAR993) achieved the same in May this year.

28,352 credits from this issuance contributes to the buffer, in addition to the 415,479 buffered from the first reporting period. Forestry projects contribute a portion of their credits to a buffer, from which credits reversed in the event of involuntary forest size reduction are replaced. Of the 12,307,136 forestry ARBOCs that have been awarded so far, 2,332,834 (19%) have been buffered.

Forest Stewards receive first CCOs

Meanwhile, another forestry project operated by the Forestland Group, Virginia Highlands I (CAR1032), will be receiving 193,277 CCOs (37,110 buffered) for a reporting period spanning April 2013 to December 2013. Forest Stewards are listed as the authorized project designee (APD), marking their first appearance on the CCO scoreboard, under the ARB protocol. On the other hand, The Forestland Group are the leading forestry OPOs by CCOs generated, with 3,947,470 issued and a further 861,342 ROCs awaiting CCO conversion.

Conservation Fund scores first CCOs under ARB protocol

Two projects managed by the Conservation Fund are being awarded a combined total of 330,950 CCOs (63,675 buffered) across the early action and ARB compliance protocols. The majority of the issuance – 330,236 (63,525 buffered) – goes to the Buckeye Forest Project (CAR1013), listed under the ARB compliance protocol. CAR1013 marks the Conservation Fund’s first project to complete a full issuance cycle under the ARB protocol.

The second Conservation Fund project to see CCO issuance, this time under early action, is the Gualala River Forest (CAR660). This project saw a comparatively less voluminous issuance with 714 CCOs issued (150 buffered), for a reporting period lasting from January 2013 to December 2013. CAR660 has previously been issued 371,995 CCOs for six earlier reporting periods ranging from January 2007 to December 2012, while an additional reporting period, for the 2014 calendar year, was just listed under early action last week, with 15,156 EAOCs up for conversion. The Conservation Fund has re-listed Gualala River Forest as CAR1099, under the ARB protocol, in February 2015. Moreover, two further Conservation Fund projects, Big River/Salmon Creek Forests (CAR408) and Garcia River Forest (CAR102), are also listed under early action with 1,414,177 and 1,201,056 EAOCs awaiting CCO conversion respectively.

Issuance for Finite Carbon

A final forestry project, Finite Carbon – Shannondale Tree Farm (CAR780), managed to gain 153,231 CCOs (29,422 buffered) across two reporting periods, under early action.  Finite Carbon has re-listed this project as CAR1062 under the ARB protocol, in April 2014. The recent issuance puts Finite Carbon in the lead, in terms of the number of forestry projects (6) and reporting periods (16) to gain CCOs.

Livestock’s lone issuance today went to a project managed by Environmental Credit Corp (ECC). ECC’s Miedama Dairy (CAR836), listed under early action, managed to gain 3,668 CCOs for three reporting periods ranging from 2009 to 2011. ECC now have 13 projects and 35 reporting periods which have gained CCOs under early action. In terms of credited projects, they are second only to Camco, who have 17 projects to have achieved CCO issuance under early action. After today’s issuance, only one further early action ECC project, Sunnyside Farms (CAR606), remains awaiting CCO issuance.

Pipeline update

The latest issuances see the early action credit pipeline dip slightly to 10.20 million, after recent EAOC listings of more than 2 million had taken the backlog unto 10.36 million. ARB has a regulatory deadline of August 2016 to complete issuing early action CCOs for all project types bar rice cultivation.

The ROC pipeline drops to 5.38 million.

Market update

Last week, prices for CCOs traded in the secondary market rose slightly, in line with weeks of sustained upward movement. According to averaged bid and ask quotes from various brokerages, the CCO-8 gained 3 cents, moving from $10.53 to $10.56, while the CCO-3 rose 9 cents from $11.08 to $11.17, Friday to Friday. Offset demand has picked up in recent months, consistent with the expansion of the cap-and-trade program in CP2 to encompass both natural gas and transport fuel suppliers.

Next issuance

ARB will next announce CCO issuances in two weeks’ time, on Wednesday, September 23, at 12pm PT.

 

Rohan Nongpiur (rohan@californiacarbon.info)

Steven Neoh (steven.neoh@climate-connect.com)

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