California, Quebec sell 77.4m allowances at floor price in latest auction

Published 00:59 on February 25, 2016  /  Last updated at 21:33 on February 25, 2016  /  Americas, Canada, US  /  No Comments

California and Quebec failed to sell out all the volume on offer in last week’s CO2 allowance auction, as bidders picked up 77.39 million of the 81.63 million on offer, all at the floor price.

California and Quebec failed to sell out all the volume on offer in last week’s CO2 allowance auction, as bidders picked up 77.39 million of the 81.63 million on offer, all at the floor price.

The auction sold 68.02 million current vintage allowances, 95% of the volume offered, at the $12.73 floor price, the California Air Resources Board (ARB) announced.

In addition, traders bought 9.36 million vintage 2019 contracts, 93% of the supply, also at $12.73 each.

The muted interest in the auction reflected the recent slump in the market, which has seen prices drop below the floor on emissions exchange ICE.

Traders say a combination of the big drop in RGGI prices, uncertainty over the future of the Clean Power Plan, and an overall weak energy complex have contributed to pushing prices down.

On Tuesday, the front-month vintage 2016 contract settled at $12.52 on the exchange, while the futures for Dec-16 delivery ended at $12.70. The combined trading volume for the two contracts was around 11,500 lots.

“The demand for allowances and prices we’ve seen today is not remarkably low, but we could see an uptick when ARB extends the cap-and-trade regulation beyond 2020 and the market gains certainty about future reductions,” said Erica Morehouse of the Environmental Defense Fund.

CALIFORNIA OFFSETS

Meanwhile, the ARB released data Wednesday showing it has issued 1.2 million offsets over the past two weeks, taking the total number of credits in the California cap-and-trade scheme to 38.36 million.

The biggest recipient was developer Finite Carbon, which received 861,352 offsets for emission reductions achieved at its Forestland Group Champion Property project in New York State between Jul. 2013 and Aug. 2014. Of those, 165,724 units have been set aside in ARB’s forest buffer account.

The same project received 48,387 early action credits, of which 9,308 were also put into the buffer account.

EOS Climate, meanwhile, received 135,017 offsets for an ODS destruction project in Forest Green, Ohio.

By Stian Reklev – stian@carbon-pulse.com

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