WCI long-term price forecast: Near term price alignment

This update to Veyt’s long-term price forecast for the Western Climate Initiative (WCI) market better accounts for the persistently low California Carbon Allowance (CCA) prices, both at auctions and on the secondary market, against the fundamentals set by the updated regulation for the California Emissions Trading System filed into law at the end of August.

Adjustments to compliance entities’ hedging horizons and speculative return thresholds better align the fundamental forecast with market participants’ engagement in the market, whilst the September updates, including Washington’s linkage to the California-Quebec market and the Manufacturing Decarbonization Incentive, remain in place alongside two refinery closures and a recalibrated uptake of electric vehicles and heat pumps. The update sets out how these changes affect the CCA price in the near term, through the 2030s, and towards the point at which the market’s bank of allowances runs out.