Secondary market prices for California carbon allowances retreated again in the third week of February, as buying thinned out ahead of the latest Western Climate Initiative auction.

As of Feb. 20, the February 2018 vintage 2018 California carbon allowance contract was seen in a bid-and-offer spread of $14.75/tonne to $14.80/tonne, easing 10 cents from prior assessments. The March 2018 vintage 2018 California carbon contract was pegged in a bid-and-ask range of $14.78/tonne to $14.84/tonne, also losing 10 cents.

The benchmark December 2018 vintage 2018 California carbon contract was marked between $15.18/tonne to $15.22/tonne as of Feb. 20, down 8 cents from previous assessments.

Over-the-counter California carbon allowance prices slumped in recent weeks as buying dried up. Market participants were presumably waiting for the next quarterly allowance auction before making purchases in the secondary market.

The sale to be held by the Western Climate Initiative, which is made up of California, Quebec and new member Ontario, is set for Feb. 21 and will offer 98,215,920 current vintage allowances and 12,437,950 advance auction allowances. The current vintage offering will consist of 14,894,520 vintage 2016 allowances and 83,321,400 vintage 2018 allowances. A reserve price of US$14.53/tonne will be used in this year's allowance auctions.

At the auction held Nov. 14, 2017, which included just California and Quebec, 100% of the more than 63.6 million of the current vintage 2017 allowances sold at a record high of US$15.06/tonne, or $1.49 above the price floor of $13.57/tonne and up from a clearing price of $14.75/tonne in the previous sale. Additionally, 100% of about 9.7 million vintage 2020 carbon allowances were purchased at $14.76/tonne.

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