|Bottom line | The Climate Trust’s initial analysis indicates that, provided Ontario and Quebec move forward with their post-2020 cap and trade regulation, existing listed and registered offsets will supply roughly 40% of the Western Climate Initiative’s demand for out-of-state projects from 2021 through 2030.|
Given the reduced offset limits in AB 398, will there be demand for new, out-of-California offsets beyond the projects that are listed and registered today? The Climate Trust’s initial analysis indicates that existing listed and registered offsets will supply roughly 40% of the Western Climate Initiative’s demand for out-of-state projects from 2021 through 2030.
The key assumptions behind this conclusion include (but are not limited to) the following:
If already financed projects fulfill 40% of the out of state demand, is there enough market to stimulate new projects? While not the strong price signal needed to motivate the full potential of land-use emission reductions throughout the United States, we believe the Western Climate Initiative will demand roughly $3.1 billion of offset credits from outside California from 2021 through 2030. This leaves a remaining $1.9 billion that will not be satisfied by existing projects. And, as other states demand more immediate climate action, additional demand is expected. For those with a long-term outlook and patience for some policy uncertainty, long-term demand remains.
This analysis is preliminary, so please be in touch if you have comments on our assumptions or outlook. Just reply to this email.
Forest offsets partner climate-change mitigation with conservation
Christa Anderson, Christopher Field and Katharine Mach, Frontiers in Ecology and the Environment, August 14, 2017
New California offset limits are inviting legal challenge, experts say
Carbon Pulse, August 15, 2017
Capitalism, an unlikely champion for climate action
Kristen Kleinman, The Climate Trust, July 17, 2017
Image credit: Flickr/Bemep