Two entities participating in California’s cap-and-trade scheme failed to surrender enough units to comply under the first two years of the Western Climate Initiative (WCI), data released on Wednesday showed.

Mexican state-owned utility Comision Federal de Electricidad, which transmits power into the state, failed to surrender any carbon units against its 2013-14 output of 472,625 tonnes of CO2e.

Lake Shore Mojave LLC, a cogeneration plant that provides both steam to manufacture borate products and electricity to utility Southern California Edison, surrendered just 12,817 allowances against its output of 42,723 tonnes of CO2e.

Entities that fail to comply must submit allowances equal to four times their shortfall, meaning at a market price of around $12.80 per unit, the oversight could cost the two companies a total $25.7 million, according to Carbon Pulse calculations.

The two entities in non-compliance now have until mid-to-late March to hand in a total 2 million allowances.

Some 318 installations in California and Quebec, the only two jurisdictions that have so far linked up their carbon markets under WCI, were required by Nov. 1 to surrender carbon units covering all their 2014 emissions and 70% of their 2013 emissions.

They were required to hand in permits covering the first 30% last year.

California’s emissions covered by WCI carbon market rose by 0.8% between 2013 and 2014, according to data published last month, while Quebec hasn’t published annual emissions figures for the two years.

CALIFORNIA

California’s 263 installations emitted a total 291.21 million tonnes during 2013 and 2014, according to data published by the state’s government.

They submitted 277.94 million allowances along with 12.77 million offsets, which represented just 4.4% of their total output.

Under the WCI scheme, emitters are allowed to use offsets to cover up to 8% of their total emissions.

The largest emitters were the Los Angeles Department of Water and Power with total output of 29.48 million tonnes of CO2e, followed by Chevron with 20.77 million, and Calpine Energy Services with 19.38 million.

Chevron and Calpine were also the largest users of offsets, handing in 1.66 million and 1.55 million respectively.

Just over 50 Californian installations used their full 8% offset usage limit during the first compliance period.

A further 50 installations used a portion of their quota, while the rest didn’t turn in any.

Of the allowances that were surrendered, 156.12 million were vintage 2013, 110.91 million were vintage 2014, 8.96 million were vintage 2015, and 1.92 million were vintage 2016.

QUEBEC

Meanwhile, Quebec’s 55 installations emitted a total 36.66 million tonnes over the two years, data showed, around 10 million tonnes below their cumulative 2013-2014 cap of 46.4 million tonnes.

By far the largest emitter was Rio Tinto Alcan’s plant at 6.55 million tonnes of CO2e, followed by Energie Valero Inc. at 2.64 million and Produits Suncor Energie S.E.N.C. at 2.37 million.

All of the province’s plants complied fully, surrendering 34.42 million allowances, 1.95 million early reduction credits, and 298,812 offsets, which represented just 0.8% of total emissions, the data showed.

Only three Quebec installations handed in offsets, all of them using their full 8% quota.

All of the surrendered offsets were of 2014 vintage and came from a single California-approved project: “Finite Carbon – The Forestland Group CT Lakes”, an improved forest management project in Coos County, New Hampshire, operated by Connecticut Lakes Realty Trust.

Quebec and California’s emissions caps more than doubled this year with the addition of the transport sector and natural gas distributors to the WCI scheme.

OFFSETS & TRANSFERS

Quebec’s installations used offsets to cover just 0.8% of their emissions, while California used 4.4%.

Emitters in the two jurisdictions were allowed to surrender a total 26.23 million offsets, but only used about half of that, meaning they bank a usage quota of 13.16 million into the rest of the decade, which effectively boosts the annual limit by 2.19 million units.

The two WCI participants also published transfer data, showing that some 113.67 million carbon units had changed hands across 1,271 transactions in 2014.

Broken down, it included 97.45 million allowances across 870 trades, with a weighted average price (WAP) of $11.95/C$13.46 for those that were priced, and 16.22 million offsets across 401 trades, with a WAP of $9.65/C$10.71 for priced transfers.

Overall, the value of all priced transfers was $1.32 billion.

Below is a full breakdown of the transfer (TRF) data, as sourced from the two governments.

Separately, California also published data on its auction proceeds, reporting that 21.2 million allowances were consigned in the most recent auction held on Nov. 17.

Some $656.78 million in revenues from that sale, contributing to a total $3.53 billion that has been deposited into the state’s Greenhouse Gas Reduction Fund to date.

By Mike Szabo – mike@carbon-pulse.com