Washington carbon offsets to retain higher prices than California offsets even after linkage, project developer says.

A superpollutant project developer anticipates that the price of Washington carbon offsets (WCOs) will remain higher than California compliance offsets (CCOs) even after the anticipated linkage in 2027.

A-Gas, a project developer active in refrigerant reclamation and destruction of ozone depleting substances (ODS) projects, previously concentrated their credit issuance through California’s ODS compliance protocol, but switched over to issuing under Washington state’s protocol due to significantly higher prices.

Carbon Pulse spoke to Arjun Patney, vice president of the commercial side of carbon solutions business development at A-Gas, who cited WCOs as trading at as high as $57, as compared to the roughly $23 offered for CCOs, although he noted that these prices are dynamic.

“We can expect allowance prices to converge [under a linkage scenario]. Offset prices should not be expected to converge”, he said on the sidelines of the Argus North American Biofuels, LCFS, & Carbon Markets Summit.

A-Gas sells credits under both the voluntary and compliance markets, but is primarily focused on Washington state issuances, followed by CCOs. The CCOs had been the company's primary focus before Washington’s cap-and-invest programme began in 2023.

“ODS destruction is a project type that can easily switch over between California and Washington state, and so market signals influence where these projects happen”, he said.

He added that “the Washington state market traded at significantly higher than California ever since it started in 2023, and so that shift towards Washington happened very quickly”.

California, Quebec, and Washington shall have different rules dictating supply and demand of offsets, he said, and Washington, for instance, requires that three-quarters of WCOs have direct environmental benefits (DEBs) linked to the state.

“That constraint will likely continue to translate to higher prices for WCOs in spite of a linkage,” he said.

“Between the two markets, we can expect that Washington offset prices will be higher."

He also said that Quebec is creating its own DEBs requirement as well, meaning that offset prices shall likely differ between all three jurisdictions even under a linkage scenario.

Patney said that outside of American compliance markets, A-Gas is active internationally and in the VCM, as they completed their ninth project in South Korea and are active in ODS destruction in South Africa.