News

April 28, 2014

NEW EPA REPORT PRAISES GHG EMISSIONS CREDIT TRADING PROCESS

On April 25, 2014, EPA published a first of its kind report on light duty vehicle manufacturers' compliance with the agency's GHG emissions standards.  The report provides credit balances before and after credit trades or transfers through the 2012 model year.  For the 2012 model year, the report indicates that with respect to 2012My performance only (i.e., not counting trades and transfers), half of the manufacturers had net credit deficit and that about half the manufacturers used credits from transfers or trades to achieve a positive credit balance for the 2012 model year.

With regard specifically to credit trading, the report indicates that six manufacturers participated in credit transactions as buyers or sellers of credits. Buyers of credits were Mercedes-Benz, Chrysler and Ferrari.  Sellers were Nissan, Honda and Tesla.  In the report, EPA stated "...this is the first time in an EPA light-duty vehicle emissions standards program that credit trading activity has occurred on such a scale, and it is clear that buying credits may be an important way for some manufacturers to bring their fleet into compliance and an incentive for other manufacturers to bring lower GHG vehicles to market early."  In the report, EPA also stated that "[t]he use of trading provisions in EPA's light-duty GHG program is a historic development, and one that EPA welcomes because we believe it will allow greater GHG reductions, lower compliance costs, and greater consumer choice."

Based on the data contained in the report and the comments made by EPA, it appears that credit trading is here for the long haul.  We believe that manufacturers looking to procure credits in the future will be able to obtain them at the least possible cost by running reverse auctions via the Mobilis Trading auction platform where a large supply of credits from multiple manufacturers will yield competitive market-based pricing.  We similarly believe that manufacturers with credits to sell can earn the most from their credits by initiating forward auctions via Mobilis where bidding from multiple buyers will ensure the best price possible at any given point in time.  We take this opportunity to remind credit holders looking to sell credits that there is no cost to establish a trading account with Mobilis, no obligation to trade, and no trading fees (our fees are paid by the buyer).

If you would like to discuss the data contained in the EPA, please don't hesitate to contact us.  The report can be found on the EPA website here.  Detailed credit balance data for each manufacturer for model years 2009-2012 is also available from EPA here.

 

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Our easy-to-use online trading platform makes it possible for automakers, engine manufacturers, fuels producers, and fleet operators to buy and sell regulatory compliance credits via forward auctions and reverse auctions.
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In a Forward Auction, a company with excess credits initiates an auction to sell credits and companies needing credits bid to buy them. As the auction proceeds, bidding drives up the price of the credits. When the auction ends, the company that has offered to pay the most for the credits is the winner.

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In a Reverse Auction, a company needing credits initiates an auction to purchase credits and companies with excess credits bid to sell their credits to that company. As the auction proceeds, bidding drives the price of the credits down. When the auction ends, the company that has offered to sell their credits for the least amount of money is the winner.

See An Example