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OTC California carbon allowance prices extend lower

Atthe secondary market, prices for California carbon allowances continued to easeto kick off October. According to broker data as of the week ended Oct. 4, thespot California carbon allowance contract was assessed in a bid-and-offer rangeof $12.82/tonne to $12.95/tonne, down 7 cents from the week prior.

Asof Oct. 4, the October vintage 2016 California carbon allowance contract wasmarked in a bid-and-ask spread of $12.82/tonne to $12.95/tonne. The December2016 vintage 2016 California carbon futures contract was pegged in abid-and-offer range of $12.84/tonne to $12.97/tonne, losing 8 cents week overweek.

Over-the-countertrading for California carbon allowances has been light in recent weeks, withmarket sources pointing to the fact that many compliance entities are likely tohave already purchased needed allowances.    

TheCalifornia Air Resources Board adopted the state's cap-and-trade regulation inOctober 2011, which went into effect Jan. 1, 2012. The first compliance periodbegan Jan. 1, 2013, with the second compliance period covering 2015 to 2017,and the third compliance period running from 2018 to 2020.

Inother news, in the absence of applicable provincial or territorial taxes,Canada will impose acarbon tax on greenhouse gas emissions of C$10 per metric ton starting in 2018,to increase by C$10 per tonne per year until it reaches C$50 per tonne in 2022.Jurisdictions with equivalent or greater carbon taxes, or that participate incap-and-trade schemes of equal value, will be exempted from the tax.

Canadahas committed to reducing carbon emissions by 17% by 2020 and 30% by 2030,using 2005 as a baseline for measurement. California's cap-and-trade program iscurrently linked with Quebec's system under the Western Climate Initiative.Proposed amendments would link the California and Quebec programs with anemerging system in Ontario beginning in 2018.

The CARBheld a public hearing at the end of September to discuss these proposedamendments to thestate's cap-and-trade program, which would, among other things, allow for thecontinued linkage with Quebec beyond 2020, allow for a future linkage with Ontarioand other jurisdictions, extend the California cap-and-trade program beyond2030, and set new emissions caps post 2020. The proposed draftchanges will be voted on by the CARB at a meeting slated for early 2017. If theamendments are adopted, they would become effective Oct. 1, 2017.

Market prices and includedindustry data are current as of the time of publication and are subject tochange. For more detailed market data, including SNL powerand naturalgas index prices, as well as forwardsand futures,visit Energy's Commodities Pages.