California carbon allowances at the secondary market moved higher during the week ended Aug. 27, as prices climbed following the latest Western Climate Initiative, or WCI, auction.
Broker data showed the August 2019 vintage 2019 California carbon allowance contract was up 6 cents from prior assessments made Aug. 12, seen most recently in a bid-and-offer range of $17.24/tonne to $17.30/tonne. As of Aug. 27, the benchmark December 2019 vintage 2019 contract was pegged in a bid-and-offer spread of $17.47/tonne to $17.50/tonne, also gaining 6 cents from Aug. 12.
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According to results released Aug. 27 by the California Air Resources Board, 100% of the more than 66 million current vintage allowances for sale in the WCI's most recent quarterly greenhouse gas allowance auction sold at $17.16/tonne, well below the record high of $17.45/tonne in the May 14 auction.
Also, 100% of the more than 9 million vintage 2022 allowances in the Aug. 20 auction were purchased at $16.85/tonne, tumbling 55 cents from the prior sale.
In the latest auction, compliance entities bought 87.2% of the current vintage allowances, which was comprised of almost 2 million vintage 2016 allowances and more than 64 million vintage 2019 allowances, and purchased 71.1% of the future vintage 2022 allowances.
Demand for the current vintage allowances was pegged at a 1.49 bid-to-cover ratio, with demand for the future vintage allowances seen at a 1.07 bid-to-cover ratio.
The California and Quebec 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.


