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California, Quebec to offer more than 67.6 million current allowances in May auction

Inthe Western Climate Initiative's second quarterly auction for the year, to beheld May 18, California and Quebec will offer for sale more than 67.6 millioncurrent vintage carbon allowances and more than 10.0 million vintage 2019allowances, according to a recent auction notice released by the California Air Resources Board.

Inthe WCI's prior auctionheld Feb. 17, current vintage allowances cleared at the California marketreserve price of $12.73/tonne, according to results issued by the CARB.For the first time, the vintage allowance offering was undersubscribed in theFebruary auction, with more than 68.0 million, or about 95%, of the near 71.5million current vintage allowances, which consisted of 2013, 2014 and 2016allowances, sold. Additionally, almost 9.4 million, or 93%, of the more than10.0 million vintage 2019 allowances on offer were purchased at $12.73/tonne.

Inthe February auction, 97.5% of the current vintage allowances up for sale werebought by compliance entities, with demand for the current vintage allowanceseyed at 0.95 times the total available supply. It was alsoreported that 99.97% of the vintage 2019 allowances were purchased in theauction by compliance entities, with demand for the vintage 2019 allowancespegged at 0.93 times the total available supply.

TheCalifornia and Quebec cap-and-trade programs were formally linked under the WCIat the start of 2014, with the first joint sale held in November 2014.Entities registered under Quebec's system may participate in joint auctions ineither U.S. dollars or Canadian dollars. To manage multiple currencies, an auctionexchange rate is determined prior to each sale. The reserve price is determinedthe business day prior to the joint auction and is determined as the higher ofthe California or Quebec reserve prices after applying the established exchangerate.