Secondary market prices for California carbon allowances retreated in value during the week ended Dec. 12. According to broker data as of Dec. 12, the December 2017 vintage 2017 California carbon allowance contract was marked in a bid-and-ask range of $14.95/tonne to $15.02/tonne, dropping 17 cents from the week before.
The December 2018 vintage 2018 California carbon contract was assessed in a bid-and-offer spread of $15.31/tonne to $15.42/tonne, decreasing 21 cents week over week.


Over-the-counter prices for California carbon allowances tumbled after the results of Ontario's final solo auction were released, showing that the sale was undersubscribed.
About 25.3 million current vintage 2017 allowances, or 83% of the nearly 20.9 million on offer, were purchased at the market reserve price of C$17.38/tonne. Additionally, 100% of the more than 3.1 million future vintage 2020 allowances were bought at a clearing price of C$18.89/tonne.
Beginning Jan. 1, 2018, Ontario is expected to formally join Western Climate Initiative members California and Quebec, participating in the WCI's quarterly carbon allowance auctions. The California and Quebec cap-and-trade programs were formally linked under the WCI at the start of 2014, with their first joint sale held in November 2014.
"The results would be seen as surprising ahead of the linkage with California and Quebec as the last three Ontario auctions were fully subscribed and the November Joint Auction clearing price was the highest yet," according to a note from CaliforniaCarbon.info.
At the WCI's auction held Nov. 14, 100% of the more than 63.6 million current vintage allowances sold at a record high of US$15.06/tonne, or $1.49 above the price floor of US$13.57/tonne and up from a clearing price of US$14.75/tonne in the previous sale.
"The demand for allowances in the current [Ontario] auction was likely dampened by fears surrounding the provincial election results in 2018. The Progressive Conservative Party has promised to replace cap and trade with a carbon tax if it comes to power after elections in June next year," CaliforniaCarbon.info added.
However, since the advanced auction was fully subscribed, with the allowances clearing about $1.50 above the reserve price, this likely indicates many entities believe that the cap-and-trade program in Ontario will continue as planned.
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