WCI market: California carbon prices edge up after auction

Published 06:29 on August 21, 2015  /  Last updated at 15:58 on August 25, 2015  /  Americas, US  /  No Comments

California carbon prices notched meager gains this week on an uptick in volumes coming after a series of quiet sessions last week in the days leading up to WCI quarterly auction on Aug. 18.

California carbon prices notched meager gains this week on an uptick in volumes coming after a series of quiet sessions last week in the days leading up to WCI quarterly auction on Aug. 18.

Current vintage CCAs for Dec-15 delivery added two pennies week-on-week, settling at $12.76 on ICE on Thursday. That vintage traded most heavily at the nearest part of the curve, with nearly 1.4 million of Aug-15 changing hands, with prices settling one cent up at $12.66.

Vintage 2018 was up two cents from the previous week to settle at $12.45 on volume of 300,000 tonnes.

Vintage 2014 for Sep-15 delivery dropped one cent to $12.68 after registering slight gains early in the week in a flurry of trading. The surge in buying indicated at least one compliance entity was squaring its position ahead of this November’s surrender deadline, when California’s utilities and manufacturers are required to submit all instruments covering the 2013-2014 compliance period.

Brokers noted that trading of CCAs typically picks up on the secondary market in the period immediately following quarterly auctions as compliance buyers clean up their positions. This week’s joint California-Quebec auction saw about 73.4 million current vintage allowances on offer, while 10.4 million vintage 2018 allowances were made available in an advance sale. Prices for both were set at a floor of $12.10 (C$12.08). Auction results are scheduled to be released Aug. 25.

Three bills affecting California’s cap-and-trade program continued to advance through the state legislature after lawmakers returned from a summer recess this week.

A bill (AB 1288) extending the state’s cap-and-trade program indefinitely beyond a 2020 sunset has been placed in the Senate appropriations committee’s “suspense” file – a last step before being forwarded to the full house for a vote in time for an Aug. 28 cutoff.

The Assembly’s appropriations committee made similar moves to position two Senate bills for a full floor vote by the lower house.

SB 32 would authorize California’s Air Resources Board to draft a plan reducing statewide emissions to 40% below 1990 levels by 2030. The other, SB 350, requires utilities to generate at least 50% of electricity consumed in the state from renewable sources by 2030.

All three pieces of legislation are expected to pass and be signed into law by Gov. Jerry Brown.

While that trio of bills proceeds through the legislature, in a special session convened to address transportation issues, Republican lawmakers have introduced two bills intended to direct and restrict the use of cap-and-trade money.

The first would dedicate $1.9 billion in cap-and-trade funds to paying for repairs and upgrades to current transportation infrastructure such as roads, while the second would prohibit any cap-and-trade money from being used to finance high-speed rail, a project favored by Gov. Brown.

By Robert Mullin – news@carbon-pulse.com

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