California carbon credit supply to be short

According to a report from the American Carbon Registry (ACR), the California carbon market will be significantly short of carbon offset credits.

During the first phase of the market that runs from 2013-2014, there is a projected demand for over 10 million carbon offset credits but the ACR report predicts that the supply of available carbon offset credits will fall short by 29%.

Under new California regulations, heavy emitting businesses will be allowed to purchase carbon offset credits to meet up to 8% of their compliance obligation.

By 2020, the California carbon market could demand over 200 million offset credits, however the ACR report shows a 67% shortfall during the final phase of the market that runs from 2018-2020.

According to the report, the bulk of carbon offset credits will be generated from Forestry projects throughout the US.

California carbon allowances have been trading around $15 apiece for several weeks after hitting a peak of $20 in July.