WCI market: California carbon prices steady despite V2018 trading flurry

Published 23:36 on July 24, 2015  /  Last updated at 11:47 on July 25, 2015  /  Americas, US  /  No Comments

Current-vintage California Carbon Allowances held steady this week on modest volume, while prices for V2018 pulled back slightly in a flurry of trading that saw volume in that contract spike to its highest levels of the year.

Current-vintage California Carbon Allowances held steady this week on modest volume, while prices for V2018 pulled back slightly in a flurry of trading that saw volume in that contract spike to its highest levels of the year.

Front-year Dec-15 CCAs settled at $12.70 on Thursday on ICE, unchanged for the week after getting a mid-week bump. Contracts for Jul-15 delivery fell 2 cents to $12.60 on a smattering of trades.

Most of this week’s activity centered around V2018, with nearly 7 million tonnes changing hands – mostly for Dec-15 and Dec-16 deliveries, compared with a volume of just over 720,000 for the current vintage. Both contracts slipped by a penny to $12.37 and $12.79, respectively.

Some traders speculated that a handful of market participants were trading spreads and realigning their positions around V2018, but question whether that indicates a significant or enduring trend in what has long been a stagnant market.

California’s Air Resources Board said it approved 230,720 additional carbon offsets (CCOs) this week, more than half of which were issued to a single ozone-depleting substances project.

That brings total issuance to over 21.5 million, of which around 17.7 million are still eligible to be used as surrender instruments by the state’s compliance entities.

No additional early action credits were approved over the bi-weekly reporting period, leaving approvals unchanged for a month despite ARB’s hiring of additional staff last month to address a long-standing administrative backlog.

Separately, Statkraft AS, Norway’s state-owned power company, has set up a North American environmental markets business to seek out trading opportunities as volumes rise in the California and RGGI markets, Bloomberg reported on Thursday.

Statkraft has hired Patrick Pfeiffer, formerly director of sales at EOS Climate and a broker at CantorCO2e, as managing director its San Francisco-based US operations.

Meanwhile, Quebec said it will hold its first sale by mutual agreement of carbon allowances on Sep. 22, offering firms covered by the Canadian province’s ETS the opportunity to buy a share of nearly 20 million units to help them meet the upcoming compliance deadline.

California and Quebec linked their carbon markets from Jan. 2014.

By Robert Mullin – news@carbon-pulse.com

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