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OTC Calif. carbon allowance prices rebound ahead of year-end

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August

OTC Calif. carbon allowance prices rebound ahead of year-end

Following softness in the week prior, California carbon allowance prices at the secondary market rebounded during the week ended Dec. 19. Market sources said trading activity has started to slow, which typically occurs ahead of the Christmas and New Year's holidays.

Broker data as of Dec. 19 showed the spot California carbon allowance contract in a bid-and-offer range of $12.84/tonne to $12.96/tonne, up 12 cents week over week.

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The December 2016 vintage 2016 California carbon contract was assessed in a bid-and-ask spread of $12.85/tonne to $12.96/tonne, rising 13 cents from a week ago.

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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 and natural gas index prices, as well as forwards and futures, visit our Commodities Pages.