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Calif. carbon allowance prices move higher ahead of new month, year

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Calif. carbon allowance prices move higher ahead of new month, year

California carbon allowance prices at the secondary market moved higher during the week ended Dec. 27 as the impending turn of the new calendar year brought new products to the forefront of the market.

However, market sources noted that trading activity was slow, which typically occurs ahead of the Christmas and New Year's holidays.

Broker data as of Dec. 27 showed the spot California carbon allowance contract in a bid-and-offer range of $12.89/tonne to $12.92/tonne, up 2 cents week over week.

The new benchmark December 2017 vintage 2017 California carbon contract was assessed in a bid-and-ask spread of $13.15/tonne to $13.30/tonne, up 34 cents from where the old benchmark December 2016 vintage 2016 ended Dec. 23.

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Earlier in December, California and Quebec held their final joint quarterly carbon allowance auction, which saw a record number of allowances sold during a single auction.

Results released by the California Air Resources Board showed that almost 77.0 million, or about 88%, of the more than 87.0 million current vintage allowances sold at the market floor price of $12.73/tonne. Additionally, about 1.0 million, or about 10%, of the more than 10.0 million vintage 2019 allowances on offer also were purchased at $12.73/tonne.

In the WCI's prior auction held in mid-August, more than 30.0 million, or just 35% of the almost 86.3 million vintage 2016 allowances, and 769,000, or 8.0% of the more than 10.1 million vintage 2019 allowances on offer, sold at $12.73/tonne.

Market sources noted that a likely factor that contributed to the stronger auction results in December was the fact that the floor price is set to rise to $13.57/tonne in 2017. Hence, this was the last quarterly auction during which entities were able to purchase allowances at a lower price before the annual increase goes into effect.

The California and Quebec cap-and-trade programs were formally linked at the start of 2014, with the first joint sale held in November 2014.

Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including power, natural gas and coal index prices, as well as forwards and futures, visit our Commodities Pages.