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Secondary market Calif. carbon allowances advance following recent softness

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Secondary market Calif. carbon allowances advance following recent softness

At the over-the-counter market, California carbon allowanceprices turned higher during the final week of April following recent weaknessthat saw values plunge to record all-time lows. Broker data as of April 26showed the spot California carbon allowance contract assessed in a bid-and-askspread of $12.52/tonne to $12.57/tonne, climbing 33 cents from the week before.

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As of April 26, the April 2016 vintage 2016 Californiacarbon allowance futures contract was eyed in a bid-and-offer range of$12.42/tonne to $12.57/tonne, increasing 31 cents week over week. The benchmarkDecember 2016 vintage 2016 California carbon futures contract was quoted mostrecently in a bid-and-ask spread of $12.55/tonne to $12.70/tonne, up 33 centson the weekly period.

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Secondary market prices for California carbon allowancesslumped sharply in recent weeks, stumbling to record lows in theover-the-counter arena following the release, at the end of February, of theWestern Climate Initiative's February auction . In the WCI's Feb.17 sale, about 95% of the more than 71.5 million current vintage allowancescleared at $12.73/tonne. Also, almost 9.4 million, or 93%, of the more than10.0 million vintage 2019 allowances on offer were purchased at $12.73/tonne.

Comprised of California and Quebec, the WCI will hold theirnext joint auctionMay 18, putting more than 67.6 million current vintage carbon allowances andmore than 10.0 million vintage 2019 allowances up for sale.

Upcoming CARBworkshops, activities

The California Air Resources Board will hold a workshopApril 28 that will continue to examine the potential linkage of the Californiacap-and-trade program with that of Ontario. During the April 28workshop, staff will also discuss the possibility of including international,sector-based offset credits issued by subnational programs to reduce emissionsfrom tropical deforestation and forest degradation.

Meanwhile, according to a recent statement from the CARB,agency staff is developing proposals for amendments to the Californiacap-and-trade program that will seek to improve efficiency and chart post-2020implementation of the program.

"The potential revisions would also support California'splan for compliance with the U.S. Environmental Protection Agency's Clean PowerPlan," the CARB said in a statement.

The Clean Power Plan rule, promulgated under Section 111(d)of the Clean Air Act, establishes statewide carbon dioxide emission standardsfor existing fossil fuel-fired electric generating units with the goal ofcutting CO2 emissions by 32% as measured from a 2005 baseline by 2030.

The agency expects to release, in July, staff reports anddraft regulation orders and begin the formal public comment period ahead of theCARB's initial board hearing in September. In the spring of 2017, the agencywill hold a final board hearing, with adopted regulations expected to go intoeffect in October 2017.

Market prices andincluded industry data are current as of the time of publication and aresubject to change. For more detailed market data, including SNL powerand naturalgas index prices, as well as forwardsand futures,visit our Commodities Pages.