RGGI I Carbon Market Forecast for r 2019 and Beyond
RGGI Carbon Market Forecast for 2019 & Beyond ICIS Webinar, 12 September 10am 2019 Sunny Roe Market Editor, North America, ICIS Mason Henderson Senior Analyst, North America, ICIS
Agenda: RGGI Updates Subnational New Jersey Virginia Pennsylvania North Carolina Federal Carbon Bills in 2019 Democratic Presidential Candidates TCI Transportation Climate Initiative: Status and timeline
New Jersey • Executive Order followed by regulation Linkage Review • CO 2 Budget Trading Rule • Global Warming Solutions Fund • Cap Level: 18m tCO 2 e with 3% annual decline Emissions • 2018 Emissions level: 19m tCO 2 e Compliance • 102 electric generating units with 36 power plants • Natural gas 48%, Coal 1.6% and Petroleum .2% Entities • Not included: 45% Nuclear and 4.8% Renewable
Virginia • Previously expected to link by 2020 • Republicans introduced restrictive clause in state budget bill Linkage • DEQ continued to finalize regulation Attempt • Virginia House and Senate seats up for re-election in 2020 • Budget bill could be readdressed in January 2020, although unlikely Future • Potential linkage: 2021 earliest possible Potential
Pennsylvania Leading to Petition Next Steps • 2018 Climate Plan • Written by Clean Air Council • Meeting on October 1, 2019 members and environmental • Governor Tom Wolf signed • Detailed analysis of economy- law experts Executive Order in January wide cap and trade 2019 • Economy-wide cap-and-trade • DEP granted an extension program • greenhouse gas emissions • Preparing two reports on 26% by 2025 and 80% by • Reserve price starting at modeling impacts and 2050 from 2005 levels 10tCO 2 e emissions • Wolf recently mentioned • PA DEP accepted for review • Completion expected by RGGI January 2020
North Carolina Executive order Modeling Results Next Steps • Governor Roy Cooper 2018 • Five separate scenarios for CO 2 • The DEQ along with academia E.O. 80 reduction will prepare a study of most cost-effective and efficient • Establishes statewide GHG • Participation in RGGI, alone, scenarios reduction goals of 40% below would result in the least 2005 levels by 2025 amount of reductions • Public comment period for the Clean Energy Plan closed on • In response, the Clean Energy • Hybrid Approach: RGGI with September 9, 2019 Plan was released complimentary programs resulted in more reductions • NC DEQ to deliver plan to Governor by October 1, 2019
Federal Carbon Bills Introduced in 116 th Congress Energy Innovation and Carbon Dividend Act, H.R. 763: Imposes a fee on CO 2 content: petroleum and/or petroleum products, natural gas, coal and derivatives from any of those products, $15 in 2019, $10 annual increase; specified fee on fluorinated gases American Opportunity Carbon Fee Act, S.1128: Fee CO 2 and other GHG emission to provide tax credits to workers; petroleum and/or petroleum products, natural gas, coal, fluorinated gases, other GHGs Climate Action Rebate Act, S. 2284: CO 2 tax with funds generated in monthly rebate to all Americans; petroleum and/or petroleum products, natural gas, coal, fluorinated gases – reduced tax, solid biomass Stemming Warming and Augmenting Pay Act (SWAP), H.R. 4058: CO 2 tax on emissions domestically produced and imported; petroleum and/or petroleum products, natural gas, coal, industrial products and processes Raise Wages, Cut Carbon Act, H.R. 3966: CO 2 tax to reduce U.S. reliance on CO 2 energy sources; petroleum and/or petroleum products, natural gas, coal, fluorinated gases American Wins Act, H.R. 4209: CO 2 tax; petroleum and/or petroleum products, natural gas, coal, fluorinated gases Healthy Climate and Family Security Act, S.940 : Cap-and-trade program; petroleum and/or petroleum products, natural gas, coal and solid biomass
Democratic Presidential Candidates and Climate Plans Former Vice President Joe Biden: Ensure the U.S. achieves 100% clean energy economy and reaches net-zero emissions no later than 2050, would like to pass federal carbon pricing policy by 2025 New Jersey Sen. Cory Booker: Supporter of Obama-Era Clean Power Plan, expressed support for carbon pricing in past – including NJ rejoining RGGI; zero-carbon electricity by 2030; “It is the lens through which we must do everything” – every federal agency would have a climate policy South Bend, Indiana Mayor Pete Buttigieg: Supports carbon tax-and-dividend and supports major direct investment to build a 100% clean energy society Former HUD Secretary Julian Castro: $10 trillion climate plan includes fee on CO2; has expressed support for carbon pricing, but not a top priority California Sen. Kamala Harris: Released climate plan on morning of CNN climate town hall, $10 trillion climate plan, includes carbon pricing and aims for a carbon-neutral US economy by 2045; target of 100% carbon-neutral electricity by 2030 Minnesota Sen. Amy Klobuchar: Co-sponsored Green New Deal resolution, plans on adopting federal carbon pricing program within 100 days of presidency; 100% net-zero emissions no later than 2050 Former Texas Rep. Beto O'Rourke: Net-zero emissions by 2050, only advocate for federal cap-and-trade system Vermont Sen. Bernie Sanders: 100% renewable energy for electricity and transportation by 2030 and decarbonization by 2050 latest; Green New Deal into action by investing $16.4 trillion in 10-year mobilization; plan does not include carbon pricing Massachusetts Sen. Elizabeth Warren: Supports carbon pricing, proposed several climate related policies, with goals to meet Green New Deal and Paris Agreement targets: Net-zero by 2050 and cut projected global emissions more than half by 2030. Andrew Yang, Businessman: Proposed $5 trillion plan that includes a carbon fee and dividend system; sets an initial carbon tax of $40/ton and create a border carbon adjustment to protect American goods
Transportation Climate Initiative (TCI) • Collaboration of 13 jurisdictions working to create a cap-and- invest program for the transportation sector What is TCI • Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia and District of Columbia • Held three public workshops Thus Far in 2019 • One webinar during 2019 – released modeling results • To test the model with various cap levels and policy designs in the coming months Moving Forward • To release draft policy proposal by December 2019 • Earliest possible initiation of program in January 2021
+ = “If you have an apple and I have an apple and we exchange these apples then you and I will still each have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas.” – George Bernard Shaw + = www.icis.com 11
RGGI I Carbon Market Update and Auction Review RGGI Auction Review Emissions & Supply Fundamental & Traded Balances Price Forecast www.icis.com 12
RGGI Auction by the Numbers Price & Current Previous Previous 20.00 Volume Auction Quarter Year 17.50 Clearing Price $5.20 $5.62 $4.50 Volume bid in Millions 15.00 Volume Sold 13,116,447 13,221,453 13,590,107 12.50 Cover Ratio 2.9 2.8 3.2 10.00 7.50 Volume Bid For 38,037,696 37,020,068 43,488,342 5.00 Minimum Bid $2.26 $2.26 $2.20 2.50 Maximum Bid $8.00 $10.01 $6.20 - Median Bid $5.07 $5.53 $4.40 < $5.07 $5.07-$5.20 > $5.20 www.icis.com 13
RGGI Auction by the Numbers Current Auction Previous Auction Year Ago Auction # Bidders % Auction % Auction Change in % Auction Change in Allowances Allowances Allowances Won Won Won Won % Won Won Won % Won Compliance Oriented 36 61% 8,001,033 38% 5,024,152 23% 61% 8,289,965 0% Entities Investors w/ 6% 786,987 9% 1,189,931 -3% 0% 0 6% Compliance Obligations 11 Investors w/o 33% 4,328,428 53% 7,007,370 -20% 39% 5,300,142 -6% Compliance Obligations 47 100% 13,116,447 100% 13,221,453 100% 13,590,107 Total www.icis.com 14
RGGI Auction by the Numbers www.icis.com 15
Emissions Data 100.0 95.0 92.7 90.0 86.6 86.5 85.0 83.0 80.0 79.1 75.0 70.0 71.0 65.0 64.8 64.5 60.0 55.0 50.0 2012 2013 2014 2015 2016 2017 2018 2019 [m tons] H1 2017 H1 2018 H1 2019 2017 2018 2019 (est) Emissions (tons 28.9 33.1 26.1 64.5 71.0 64.8 CO2e) www.icis.com 16
Emissions Forecast [m tons] Current With NJ Change 2020 72.7m 90.8m +18.1m 2025 62.6m 78.4m +15.8m www.icis.com 17
Fundamental Bala lance (i (including NJ) [m tons] 2019 2020 2021 2022 2023 Demand -64.8 -90.6 -91.2 -87.9 -84.6 Supply 55.7 72.3 75.6 72.9 70.1 Balance -9.1 -18.2 -15.5 -15.0 -14.5 Cumulative Balance 93.7 75.4 59.9 44.9 30.4 www.icis.com 18
Traded Balance (including NJ) [m tons] 2019 2020 2021 2022 2023 Demand -70.6 -97.6 -90.9 -85.9 -79.0 Supply 52.1 68.8 72.3 69.6 67.0 Balance -18.5 -28.8 -18.6 -16.2 -12.0 Cumulative Balance 28.2 -0.6 -19.2 -35.5 -47.5 www.icis.com 19
Price Forecast ($/tonCO2e) 14.00 13.00 12.00 10.41 11.00 10.00 10.10 9.75 9.34 9.01 9.00 8.41 8.00 7.51 7.00 6.72 6.00 5.84 5.62 5.35 5.27 5.20 5.00 4.00 Base Case High Case Low Case CCR ECR www.icis.com 20
Recommend
More recommend
