trending Market Intelligence /marketintelligence/en/news-insights/trending/vr-t4raBqzhgW_F3fuCc1w2 content esgSubNav
In This List

Calif. carbon allowance prices climb before year's final quarterly auction


Japan M&A By the Numbers: Q4 2023


See the Big Picture: Energy Transition in 2024


IR in Focus | Episode 10: Capital Markets Outlook


Infographic: The Big Picture 2024 – Energy Transition Outlook

Calif. carbon allowance prices climb before year's final quarterly auction

Secondary market prices for California carbon allowances advanced during the week ended Oct. 23 due to increased buying activity ahead of the next Western Climate Initiative, or WCI, auction.

The October 2019 vintage 2019 California carbon allowance contract was pegged in a bid-and-ask range of $17.12/tonne to $17.22/tonne, up 9 cents from Oct. 7 assessments. As of Oct. 22, the benchmark December 2019 vintage 2019 contract was discussed in a bid-and-offer spread of $17.27/tonne to $17.32/tonne, also gaining 9 cents from Oct. 7 pricing.

SNL Image

Over-the-counter prices for California carbon allowances are advancing ahead of the Nov. 19 joint auction of greenhouse gas allowances for California and Québec under the WCI.

According to an updated auction notice released Oct. 15 by the California Air Resources Board, the last quarterly allowance sale of the year will offer 67,435,661 current vintage 2019 and 9,038,000 future vintage 2022 allowances.

At the WCI's previous auction in August, 100% of the more than 66 million current vintage allowances sold at a clearing price of $17.16/tonne, well below the record high of $17.45/tonne reached in the May 14 auction.

The August auction was the third straight in which Pacific Gas and Electric Co. did not participate aside from consigning directly allocated allowances for the benefit of ratepayers, analysts said previously. The utility, along with its parent PG&E Corp., recently entered Chapter 11 bankruptcy protection and filed for a joint plan of reorganization.

The decreased demand from the utility likely artificially depressed allowance prices during the August auction, analysts said. They added that they anticipate increased buying interest in the Nov. 9 sale as a result.

The California and Québec cap-and-trade programs were joined under the WCI at the start of 2014. California's cap-and-trade system covers emissions from utility and industrial facilities that emit more than 25,000 tonnes of carbon each year and from entities that opted into the program. Those facilities must purchase either carbon allowances or offsets to account for their annual emissions under the yearly emissions cap. The cap is reduced annually until the 2020 target is reached.

In other news, the Trump administration on Oct. 23 said it is suing the state of California over its emissions trading scheme, challenging its partnership with the Canadian province of Québec under the WCI, according to an Oct. 23 news release from the Department of Justice.

"The state of California has veered outside of its proper constitutional lane to enter into an international emissions agreement. The power to enter into such agreements is reserved to the federal government, which must be able to speak with one voice in the area of U.S. foreign policy," Assistant Attorney General Jeffrey Bossert Clark of the Justice Department's Environment and Natural Resources Division said in the news release.

SNL Image