InSights

Allowance Price and GHG Emissions Forecast for WCI Carbon Market

This report estimates Californian and Quebec emissions in specific sectors from 2022-2050. We have revised our 2021 expectations for key sectors like transportation and Electricity based on the recovery rate seen in this post-pandemic phase.

This report also provides historical published emission data and trends prior to 2022. The CaliforniaCarbon team has combined past emissions data with company annual reports and industry-level production indicators, thus enabling a high degree of confidence in accurately predicting the still unannounced 2021 and 2022 emissions.

This report returns with a 2030 and 2050 projection. The 2030 projection has been aligned with the Scoping Plan conversations underway. In addition, we have observed some fundamental shifts from our pre-covid expectations.

The following are some of those changes in our scenarios:

The year 2021 saw 250,000 + ZEVs sold in California taking the cumulative sale past the 1 million milestone. Our ZEV sales expectation has increased in our latest model run.

The entry of investors has smoothened our price curve. Compared to the \\\'jagged\\\' price curve from 2021, we have incorporated investors into the 2022 model run. That has smoothened out our price forecasts.

The ongoing scoping plan does not hint at any changes pre-2030. However, we have taken a cue from the plan to extend our projections to 2050. Also, we have taken scenarios that factor a tightening of the carbon budget post-2030.

The Canada Clean Fuels Regulation (CFR) is expected to go live in 2023. We have factored its impact on Quebec transportation.

In this year's forecast, we have assumed a slower build-out of renewables in the near term (2022-2024) on account of supply chain challenges being faced by several developers, the possibility of a slow-down in economic activity and higher cost of borrowings.

List Contents

1. Glossary of terms

Introduction

2. Executive Summary

2.1 Key variables influencing WCI carbon market

2.2 Updating our modeling and model scenarios

2.3 Updated emissions outlook for 2022

2.4 Outlook for Compliance Offsets till 2030

2.5 Emissions and pricing for the WCI carbon market in different scenarios for 2030 and 2050

3. Background to the WCI Cap and Trade Market

3.1 The Global Context

3.2 Cap-and-Trade Background Brief

3.3 Sectoral Emission Reduction Programs

3.4 Legislation in California

3.5 California Market Mechanics

3.6 Legislation in Quebec

3.7 2022 Quebec Plan for a Green Economy

3.8 Western Climate Initiative (WCI)

3.9 California Covered Emission Historical Trends

3.10 Quebec\\\'s Covered Emission Historical Trends

4. Updates impacting the WCI cap and trade market

4.1 California Draft Scoping Plan review

4.2 Increased role of investors in the California-Quebec program

4.3 Auction trends in the Cap and Trade

4.4 Covid continues to cast a shadow

4.5 Russian invasion of Ukraine

4.6 New business cycle and new world order for the decade?

California Emissions Outlook 2021, 2022

5. California Expectations of 2021 Validated Emissions and 2022 Forecast

5.1 California's Covered Emissions Forecast for 2021 and 2022

6. California Key Sectors: Review and Forecast

6.1 Transportation Fuels

6.2 Impact of Ukraine-Russia conflict

6.3 Natural Gas Suppliers

6.4 Refineries and Hydrogen Plants

6.5 Oil and Gas Production

6.6 Fossil Fuel Power Generation

6.7 Electricity Imports

6.8 Building Emissions

6.9 Building Stock Forecast

Quebec Outlook 2021,2022

7. Quebec's Covered Sector Forecast for 2021 & 2022

8. Quebec's Key Sectors

8.1 Transportation

8.2 Natural Gas Distribution by End-Use

9. CA-QC emissions forecast till 2030

9.1 The forecast is based on CaliforniaCarbon\\\\\\\'s model

9.2 Key variables considered for the present forecast

9.3 Key updates since our last forecast

9.4 Long term scenarios considered

9.5 Sectoral emissions analysis

10. 2030 outlook for offsets

10.1 Scenarios Considered

10.2 Demand-Side Scenarios

10.3 Supply-Side Scenarios

10.4 Scenario Analysis: Demand-Side

10.5 Scenario Analysis: Supply-Side

11. Demand-supply gap of allowances

11.1 The market is sitting on about 490.5 million