Allowance and offset demand will increase in 2015

According to Triple Pundit, a website about ethical, sustainable & profitable business, allowance and offset demand will increase in 2015.


The second compliance period for California’s cap-and-trade system began the first of this year. Distributors of transportation fuel and natural gas have officially joined the ranks of other capped, covered entities, and with the addition of these fuel distributors, the emission cap immediately more than doubles in size. As a result, The Trust predicts that cost containment mechanisms such as offsets and banking will become much more significant components of the cap-and-trade system.

A recent whitepaper estimates the current market value at $2 billion annually, and anticipates that this will increase to $4 billion in 2015.

To date, the California market has largely been viewed as an operational success, however, some have suggested the system has not yet experienced stresses that could result from drastic and unplanned energy use spikes—escalations triggered by weather events such as drought, hot summers, and cold winters.

The Trust believes that the introduction of transportation fuels under the cap, coupled with allowance uncertainty and shortage of offsets, are likely to increase the demand for both allowances and offsets in 2015.

On the other hand, Triple Pundit says that It was just a few short years ago that observers questioned whether carbon markets would continue beyond the end of the Kyoto Protocol in 2012. Carbon markets have not only managed to survive, but slowly expanded, with longer term prospects for carbon suggesting that markets will continue to grow.