California and Quebec sold 73.6 million 2015 vintage CO2 allowances at $12.21 each in their second joint auction held last week, market regulators said Wednesday.

The auction was the first since the size of the market nearly doubled on Jan 1, when fuel distributors were brought into the scheme.

Buyers picked up all the available volume in the auction, which cleared 11 cents above the set minimum price, the California Air Resources Board and the Quebec Ministry of Sustainable Development, Environment, and the Fight against Climate Change said in a statement.

The governments also sold 10.43 million 2018 vintage allowances at $12.10 each, the official minimum price.

The auction was held on Feb 18, and after the result was announced, secondary market prices for the March 2015 contract fell 30 cent to around $12.35, Reuters reported.

Observers said the fact that all of the 2018 allowances on offer were sold showed faith in the long term outlook for the market.

“These allowances can only be used starting in 2018 and the fact that there was a high level of demand for them once again reflects confidence in the future strength of the market,” said Katie Hsia-Kiung of the Environmental Defense Fund in a comment.

Auction data showed that 93.5 percent of the 2015 allowances and 95.1 percent of the 2018 batch were picked up by compliance companies.

Market regulators did not reveal which companies bid successfully at the auction, but a list of approved bidders showed a number of major energy firms including BP, Chevron, ExxonMobil and Pacific Gas and Electric, as well as some financial firms including bank Morgan Stanley.

California will release data on its revenue from the auction on Mar 17, while the Quebec government estimated it earned C$190 million ($152.8 million) on the sales.

By Stian Reklev – stian@carbon-pulse.com