WCI market: Auction volume to dip in August

Published 23:15 on June 19, 2015  /  Last updated at 23:15 on June 20, 2015  /  Americas, US  /  No Comments

The WCI will offer 73.4 million current vintage carbon allowances in its next quarterly auction scheduled for August, compared with 76.9 million sold during the most recent fully subscribed auction held in May, the California Air Resources Board (ARB) said on Friday.

The WCI will offer 73.4 million current vintage carbon allowances in its next quarterly auction scheduled for August, compared with 76.9 million sold during the most recent fully subscribed auction held in May, the California Air Resources Board (ARB) said on Friday.

Additionally, about 10.4 million vintage 2018 allowances will be made available in advance auction, in line with the previous offering, which was undersubscribed.

Floor prices for all allowances will be set at US$12.10 (C$12.08), unchanged from the May auction, which saw vintage 2015 clear at US$12.29 while 2018 held to the floor.

ARB earlier this week said the May auction netted $626.5 million, about $3 million short of the previous February auction, with declining sales of the 2018 vintage accounting for the fall in revenue. The auctions have so far yielded more than $2.2 billion since California’s cap-and-trade market took effect in 2013.

The August auction will be the fourth held jointly with the Canadian province of Quebec and the third to include California’s massive transportation sector.

CCAs LIFT AFTER VOLUME JUMP

Prices for California Carbon Allowances (CCAs) nudged higher this week on ICE with volumes declining into mid-week after a sustained period of relatively high activity for a market characterised by stagnation this year.

The Dec-15 contract on Thursday settled up 2 cents week-on-week at $12.72. No contracts changed hands during the session, though open interest was up sharply on a week earlier. Jun-15 was also up 2 cents for the week to $12.57 in modest trading.

Earlier this week, traders expressed scepticism that the recent flurry of activity in the secondary market signaled a long-term trend, saying nothing had fundamentally changed in the market.

BILLS ADVANCE

How significantly fundamentals will shift on policy changes currently in the works is also in doubt, but three bills affecting the WCI cap-and-trade market resumed movement through the California legislature this week as legislators turned their attention away from budget negotiations.

One bill that would lift the 2020 sunset on the state’s cap-and-trade mechanism worked its way into a Senate committee after being approved by the Assembly earlier this month. The bill would authorise ARB to operate the market indefinitely to help California meet its emissions reduction targets.

Also, a Senate-approved bill requiring the state to reduce its GHG emissions to 80% below 1990 levels by 2050 made its way into an Assembly committee, as did another Senate bill that increases the state’s renewable energy usage to 50% by 2030.

If the bills proceed at the same smooth pace they are on track to get approved by the legislature during the current session ending Sept. 11, which would mean they could be signed into law by a supportive Governor Jerry Brown by Oct. 11.

By Robert Mullin – news@carbon-pulse.com

 

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