To quickly access the page content, please click on the links below.
News Update
- November auction #37 sets record high settlement prices. The November 15th auction sold all the 57.6M vintage 2023 allowances at a settlement price of $38.73/t, a $3.53 increase from the previous auction held in August. This marks the highest settlement price since the start of the program in 2014 and is the third-largest price increase seen between auctions since 2021. The auction for vintage 2026 allowances sold all 7.5M allowances offered at $37.40/t, a $3.24 increase from the August auction and the highest settlement price for forward year allowances to date.
- California-Quebec update 2024 auction reserve prices. The Western Climate Initiative (WCI), currently made of California and Quebec, has set the auction reserve price for 2024 at $24.04/t for its quarterly joint auctions, an 8.2% increase from the price of $22.21 in 2023. California increases the auction reserve price each year by 5% plus the US Consumer Price Index (CPI). The WCI market expects to auction over 200M vintage 2024 allowances, and almost 29M vintage 2027 allowances over the course of 2024 with tentative auctions scheduled for February 14th, May 15th, August 14th, and November 20th.
- California industrial allowances increase for 2024. California will be allocating nearly 72M allowances to industrial and natural gas suppliers for the 2024 compliance year. While 37.5M allowances will be distributed to industrial sources in 2024, a 5.9% increase from the 35.4M distributed in 2023, allowance allocations for all eligible entities in 2024 fell by nearly 1% to just under 140M allowances from the 141M allowances allocated in 2023.
- California-Quebec GHG market volume down 39% in Q3. The linked cap-and-trade market recorded ~65M metric tons worth of allowances and offsets transferred over Q3 2023, an 11.3% drop from the previous quarter, and an overall drop of 38.6% compared to the 106M transferred in Q3 2022.
- ICE to include CCAs for TAS. The Intercontinental Exchange (ICE) trading platform plans to add a trade at settlement (TAS) for physically delivered vintage 2023 and 2024 CCAs starting on December 11th, 2023. TAS allows market participants to input an order to buy or sell an eligible futures contract or spread trade during the trading session at a price equivalent to the settlement price for that contract, or at a price within five minimum price fluctuations, known as ticks, below or above that settlement price.
Offsets Update
- ARB has issued an overall 535,958 carbon offsets in November 2023.
- 188,740 issued on November 7th
- 347,218 issued on November 21st
- 11,252 of the CCOs issued are listed as DEBs
- 256 mln offsets have been issued since inception by ARB and Quebec.
California:
Issuance |
ODS |
Livestock |
U.S. Forest |
Urban Forest |
MMC |
Rice Cultivation |
Total |
Oct. '23 |
25,809,710 |
9,121,140 |
206,340,792 |
- |
12,667,681 |
- |
253,939,609 |
Nov. '23 |
25,809,996 |
9,128,766 |
206,616,701 |
- |
12,920,104 |
- |
254,475,567 |
Delta |
286 |
7,626 |
275,909 |
- |
252,423 |
- |
535,958 |
Quebec:
Issuance
|
ODS
|
Landfills |
Covered Manure Storage
|
Active Coal Mines
|
Active Underground Coal Mines
|
Total
|
Oct. '23
|
691,705
|
789,976
|
- |
- |
- |
1,481,681
|
Nov. '23
|
691,705
|
789,976
|
- |
- |
- |
1,481,681
|
Delta
|
- |
- |
- |
- |
- |
- |
ARB Schedule
1/16/2024 |
Q1 Auction Application Deadline |
2/2/2024 |
Bid Guarantees Due |
2/14/2024 |
February Joint Allowance Auction #38 |
2/21/2024 |
Auction Results Summary |
|
|
4/15/2024 |
Q2 Auction Application Deadline |
5/3/2024 |
Bid Guarantees Due |
5/15/2024 |
May Joint Allowance Auction #39 |
5/22/2024 |
Auction Results Summary |
|
|
7/15/2024 |
Q3 Auction Application Deadline |
8/2/2024 |
Bid Guarantees Due |
8/14/2024 |
August Joint Allowance Auction #40 |
8/21/2024 |
Auction Results Summary |
|
|
10/21/2024 |
Q4 Auction Application Deadline |
11/8/2024 |
Bid Guarantees Due |
11/20/2024 |
November Joint Allowance Auction #41 |
11/27/2024 |
Auction Results Summary |
California Carbon Offsets (CCO)
Offsets Pricing as of December 12th, 2023:
- California Carbon Offset (CCO3) - (3 years of Buyer Liability): $16.50
- California Carbon Offset (CCO3 - DEB) - (3 years of Buyer Liability): $30.50
- Golden California Carbon Offset (CCO-G) – Spot Delivery: $17.00
- Golden California Carbon Offset (CCO-G DEB) – Spot Delivery: $31.00
California Carbon Allowances (CCA)
Offsets Pricing as of December 12th, 2023:
- Vintage 2023 – Dec. 2023 Delivery: $39.47
- Vintage 2023 Average Daily Price (Nov. 2023): $38.44
Market Update
- The average daily price in November 2023 was $38.44, a 5.3% increase compared to the average daily price of $36.51 in October 2023.
- Prompt pricing saw a brief increase in the first week of November, opening at $37.77 on November 1st before reaching $38.44 two days later. Prices then saw a decline through the second week of the month, starting the week at $38.39 and finishing at $38.10. Prices in the third week reached the month high of $38.86 on November 17th before dipping down to $38.54 to open the short week and steadily rose to close out the month at $38.70.
- The $0.67 spike on November 3rd followed California and Quebec regulators in late October announcing a joint workshop scheduled for November 16th to examine future allowance costs in the linked cap-and-trade program. Previous workshops discussed more stringent changes to the program, mentioning a 48% reduction requirement by 2030 and modeling a budget scenario of 55% as alternative possibilities, likely contributing to the record-setting CCA price of $38.86 seen on November 17th as a result from speculations made from the workshop.
- Krane Shares Carbon ETFs (both ETFs) held to 9.6 million shares on November 6th, 2023, compared to 11.3 million carbon allowances on October 6th, 2023, a 15% decrease in the carbon futures holdings. Furthermore, we are still 8.9 million, or 48%, off the all-time high of 18.5 million California allowances seen in February 2022.
Figure 1. CCA Daily Transactions (Spot Contract - Jan. 2023 to Present)
|
|
2022 Average Daily Price: $28.93 per ton |
2023 Average Daily Price: $32.90 per ton |
2022 Highest Daily Price: $33.50 per ton (Jan. 1st, 2022) |
2023 Highest Daily Price: $39.47 per ton (Dec. 12th, 2023) |
Questions? Contact our team for more information: environmental@aegis-hedging.com
CONFIDENTIAL – UNAUTHORIZED THIRD-PARTY DISTRIBUTION PROHIBITED