Secondary market prices for California carbon allowances were slightly higher heading into the last half of December.

As of Dec. 17, the December 2018 vintage 2018 California carbon contract was assessed in a bid-and-ask spread of $15.57/tonne to $15.60/tonne, up 6 cents from Dec. 3. The December 2019 vintage 2019 California carbon allowance was eyed in a bid-and-offer range of $16.41/tonne to $16.45/tonne, rising 6 cents from early December.

Trading activity for December 2018 vintage 2018 and for future delivery contracts has stepped up in recent weeks ahead of the anticipated increase in the market floor price at the start of 2019. The California Air Resources Board said Dec. 3 that the California 2019 floor will rise to $15.62/tonne, from $15.31/tonne this year.

Over-the-counter California carbon allowances also ticked higher in the wake of the Western Climate Initiative, or WCI's, final quarterly auction for the year in mid-November, which saw 100% of the more than 78.8 million current vintage allowances sell at US$15.31/tonne a piece, up 26 cents from the August sale.

Additionally, more than 9.4 million future vintage 2021 allowances were purchased at $15.33/tonne each, increasing 43 cents from August.

The California cap-and-trade system covers emissions from utility and industrial facilities, which emit more than 25,000 tonnes of carbon each year, and from entities that opted into the program. Those facilities must purchase either state carbon allowances or carbon offsets to account for their annual emissions under the annual emissions cap. The cap is reduced annually until the 2020 target is reached.

Carbon allowances are sold at quarterly auctions run by the California Air Resources Board. Up to 8% of an entity's emissions can be covered using offset credits from certified projects. Carbon offset credits, as well as carbon allowances, can be purchased in the secondary market.

The California and Quebec cap-and-trade programs were joined under the WCI at the start of 2014, with their first collective auction taking place in November 2014. Ontario briefly became the third member of the initiative Jan. 1, 2018, which allowed the three governments to hold combined auctions under the program. But newly elected Ontario Premier Doug Ford said in June that he intended to end the province's involvement in the WCI, saying the government would not participate in any additional auctions.

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