California has long been a national leader in ambitious climate policy, having set its original greenhouse gas (GHG) reduction targets in 2006 and implemented its cap-and-trade program in 2013. Prices for California carbon allowances (CCAs) have moved up strongly in the last two years, though we believe the outlook for continued price gains remains very positive. With the implementation of new market policies that introduce supply-tightening measures and continued allowance demand from steady emissions, we see continued support for the KraneShares California Allowance Strategy ETF (Ticker: KCCA).
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This past year has been big for cap-and-trade-style systems, and that momentum looks like it’s continuing in 2023. Recently, we’ve seen new programs start up in Oregon and Washington, a proposal in New York State for new carbon markets, and sustained high prices in existing programs in California and the Northeast. Although these programs differ in their details, they all attempt to reduce greenhouse-gas emissions cost-effectively by creating a market for permissions to emit—called “allowances”—subject to an overall cap on the amount of aggregate emissions allowed.
Navigator CO2 Ventures’ proposed carbon pipeline project in the U.S. Midwest is struggling to secure a site to store millions of tons of greenhouse gas it hopes to collect from the region’s ethanol plants, as residents refuse to give up land rights over fears the underground reservoirs could leak, according to documents reviewed by Reuters.
EPA is about to finalize a sky-high value for carbon that could be used whenever the federal government leases land to oil drillers or buys new mail trucks.
Last December, New York’s Climate Action Council released its Final Scoping Plan, an all-encompassing proposal to cut the state’s carbon emissions to zero by 2050. The 400-page regulatory framework would introduce new, sweeping rules across the state, including one scheme that would particularly harm the state’s economy.
Washington State reported the results of its first cap-and-trade auction for fighting climate change, as carbon markets gain renewed interest among US policy makers trying to slash greenhouse gas emissions.
It is a good time to be in the decarbonization business in the United States. The Inflation Reduction Act—with its $374 billion cornucopia of green incentives, subsidies, and grants—was designed to entice private companies to invest in the transition away from fossil fuels. Initial reports already suggest that the IRA may be working.
A pressing question for policymakers, researchers, and financial advisors is whether private businesses are appropriately positioned for climate-related changes in the physical, economic, financial, and policy environments. Companies may have assets that are at risk as sea levels or extreme temperatures rise, or they may have business models that will become more or less profitable given new carbon taxes or climate policies that promote decarbonization.
Hawaiʻi tax experts are recommending a new carbon tax for the state. If implemented, Hawaiʻi will become the first state in the nation to do so. A new blog by University of Hawaiʻi Economic Research Organization (UHERO) experts says “the rationale for a carbon tax remains sound,” however, it wouldn’t come without negative impacts.
America’s greenhouse gas emissions from energy and industry rose last year, moving the nation in the opposite direction from its climate goals, according to preliminary estimates published Tuesday by the Rhodium Group, a nonpartisan research firm.