The Consultant - 2018 - 24

CARBON OFFSETS

compliance market in the world allowing the use of forest offsets. California implemented its statewide GHG cap in 2013
with the goal of reducing statewide emissions to 1990 levels
by 2020. Approximately 600 facilities are now covered by the
C&T regulation and covered facilities must now account for
their total annual GHG emissions. In 2016, California passed
legislation to further reduce statewide emissions to 40 percent
below 1990 levels by 2030 and in 2017 extended the C&T and
offset program to 2030.
Through 2020, covered entities may use ARB-issued compliance offsets to meet up to 8 percent of their annual emissions
obligations. However, the law passed by the California legislature in 2017 that extended the offset program to 2030 also
reduced covered entities allowed use of offsets from 8 percent
to 4 percent from 2021 to 2025, increasing to 6 percent from
2026 to 2030. Further, at least half of the offsets used by a
covered entity during the 2021 to 2030 program period must
then be sourced from projects providing "direct" air and water
quality benefits to California, which is currently interpreted as
projects based within California.
The unintended, but likely impact is the creation of two distinct but parallel offset markets. California-based projects will
now enjoy guaranteed demand while out of state projects could
generate a surplus of credits. However, the likely reduction in
allowed use of out-of-state offsets by California covered entities may be somewhat mitigated by the linkage of California's
C&T program to other jurisdictions' programs. For example,
Quebec linked with California in January 2014 and Ontario will
likewise join their C&T program with California and Quebec in
January 2018. Because the majority of forestland in Canadian
provinces is Crown owned and forest offset protocols are not
currently in place in either province, linked Canadian jurisdictions will, for now, likely be net buyers of compliance offsets,
which is good news for U.S.-based forest projects. Both Oregon
and Washington state are also currently contemplating C&T
programs that would link with California, Quebec and Ontario.
Covered entities in California may meet their annual GHG
emissions goals through a combination of pollution control
technologies, emissions fees paid directly to the state via the
purchase of "allowances" and through the limited use of offsets
as described. The cost of low carbon production technologies is
decreasing and therefore these technologies are being adopted in
new energy and manufacturing facilities and facility upgrades.
However, low carbon technologies are still relatively expensive at $50-100+ per MtCO2e. For GHG emissions remaining
after adoption of control technologies, entities may purchase
a combination of allowances and offsets. A limited number of
California Carbon Allowances (CCAs) are sold at a quarterly
auction and for most entities satisfy 92 percent or more of their
emissions obligation. CCAs have a floor price established by
the state, which as of 2017 is $13.57 per ton and increases by
five percent plus inflation per year. California Carbon Offsets
(CCOs) have no floor price, have historically traded at a 15 to
30 percent risk adjusted discount to CCAs, and are therefore
the lowest cost emissions compliance mechanism for covered
24

entities. From the first CCO issuance in September 2013 to
October 2017, CCO prices have gradually increased from a low
of $8.75 to over $12 per offset (Figure 1).

Figure 1. California Carbon Allowance and broker-quoted
California Carbon Offset prices (2013 Q3 to 2017 Q4;
CaliforniaCarbon.info).

Significant offset transaction costs translate to less than
100 percent potential offset utilization rates, especially among
entities with relatively small emissions obligations. Consequently,
market reporting service CaliforniaCarbon.info estimates
total offset demand for California's first program period
(2013 through 2020) at approximately 180 million tons, less
than the 220 million tons forecast in 2013. To date, more than
83 million California Carbon Offsets (CCOs) have been issued
by the California ARB, of which nearly 60 million are from forest projects across the U.S. (Figure 2). Ninety-eight percent of
forest offsets issued to date are from IFM projects, and most of
the remaining volume demanded will likewise be supplied from
IFM. Under the 2021 to 2030 program period where offset use
will be constrained, initial forecasts by CaliforniaCarbon.info
and the American Carbon Registry place potential offset demand
for California in-state, domestic non-California and Canadian
linked jurisdiction (Ontario and Quebec) offsets at approximately
70 million, 70 million and 46 million offsets, respectively.

Figure 2. California
Carbon Offsets issued
by offset project type
(2013 Q3 to 2017 Q4;
CaliforniaCarbon.info).
THE CONSULTANT

2018


http://www.CaliforniaCarbon.info http://www.CaliforniaCarbon.info http://www.CaliforniaCarbon.info http://www.CaliforniaCarbon.info

Table of Contents for the Digital Edition of The Consultant - 2018

From the Executive Director End Notes
From the President ACF: Forestry, Fellowship and Value
Sharing the Stories of the Trees: ACF Distinguished Forester Jim Able
Maple Syrup: A Steigerwaldt Family Tradition
The South Carolina Chapter and Forestry Students
The Association of Consulting Foresters Celebrates 70 Years
Carbon Offsets: A Viable Opportunity for Forest Landowners?
Changes of Biblical Proportions
Forests for Fish In Michigan, Foresters and Anglers are Learning from Each Other
Case Study: Richland Township Woods, North Central Indiana
Invasive Species 101
Evaluating Forest Inventory Technology for Small Landowners
Choosing the Right Accountant or Tax Preparer
The History of Forestry in Ireland
The American Oak Project Midleton Distillery Creates Rare Irish Whiskey to Promote Sustainable Forestry
Products & Services Marketplace
Index of Advertisers
Why not Surround Yourself with the Best?
The Consultant - 2018 - Intro
The Consultant - 2018 - cover1
The Consultant - 2018 - cover2
The Consultant - 2018 - 3
The Consultant - 2018 - 4
The Consultant - 2018 - 5
The Consultant - 2018 - From the Executive Director End Notes
The Consultant - 2018 - From the President ACF: Forestry, Fellowship and Value
The Consultant - 2018 - Sharing the Stories of the Trees: ACF Distinguished Forester Jim Able
The Consultant - 2018 - 9
The Consultant - 2018 - 10
The Consultant - 2018 - 11
The Consultant - 2018 - Maple Syrup: A Steigerwaldt Family Tradition
The Consultant - 2018 - 13
The Consultant - 2018 - 14
The Consultant - 2018 - 15
The Consultant - 2018 - The South Carolina Chapter and Forestry Students
The Consultant - 2018 - 17
The Consultant - 2018 - 18
The Consultant - 2018 - 19
The Consultant - 2018 - The Association of Consulting Foresters Celebrates 70 Years
The Consultant - 2018 - 21
The Consultant - 2018 - Carbon Offsets: A Viable Opportunity for Forest Landowners?
The Consultant - 2018 - 23
The Consultant - 2018 - 24
The Consultant - 2018 - 25
The Consultant - 2018 - 26
The Consultant - 2018 - 27
The Consultant - 2018 - Changes of Biblical Proportions
The Consultant - 2018 - 29
The Consultant - 2018 - 30
The Consultant - 2018 - 31
The Consultant - 2018 - 32
The Consultant - 2018 - 33
The Consultant - 2018 - Forests for Fish In Michigan, Foresters and Anglers are Learning from Each Other
The Consultant - 2018 - 35
The Consultant - 2018 - 36
The Consultant - 2018 - 37
The Consultant - 2018 - Case Study: Richland Township Woods, North Central Indiana
The Consultant - 2018 - 39
The Consultant - 2018 - Invasive Species 101
The Consultant - 2018 - 41
The Consultant - 2018 - 42
The Consultant - 2018 - 43
The Consultant - 2018 - Evaluating Forest Inventory Technology for Small Landowners
The Consultant - 2018 - 45
The Consultant - 2018 - 46
The Consultant - 2018 - Choosing the Right Accountant or Tax Preparer
The Consultant - 2018 - The History of Forestry in Ireland
The Consultant - 2018 - 49
The Consultant - 2018 - 50
The Consultant - 2018 - 51
The Consultant - 2018 - The American Oak Project Midleton Distillery Creates Rare Irish Whiskey to Promote Sustainable Forestry
The Consultant - 2018 - 53
The Consultant - 2018 - 54
The Consultant - 2018 - 55
The Consultant - 2018 - Products & Services Marketplace
The Consultant - 2018 - 57
The Consultant - 2018 - 58
The Consultant - 2018 - 59
The Consultant - 2018 - Index of Advertisers
The Consultant - 2018 - 61
The Consultant - 2018 - Why not Surround Yourself with the Best?
The Consultant - 2018 - cover3
The Consultant - 2018 - cover4
The Consultant - 2018 - outsert1
The Consultant - 2018 - outsert2
The Consultant - 2018 - outsert3
The Consultant - 2018 - outsert4
The Consultant - 2018 - outsert5
The Consultant - 2018 - outsert6
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