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News Update
- CARB to offer 58.4 M total allowances in February auction. California Air Resources Board (CARB) will offer 58.4 M allowances at a minimum price of $24.04 in the first joint auction of the year, scheduled for February 14th, 2024. The current auction will offer 51.2 M vintage 2024 allowances and the advance auction will offer 7.2 M vintage 2027 allowances. Summary results will be released on February 21st, 2024, just one week after the auction.
- California-Quebec update auction reserve prices for 2024. The Western Climate Initiative (WCI), currently made of California and Quebec jurisdictions, has set the auction reserve price at $24.04/t for its quarterly joint auctions in 2024, 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.
- Canada signs first large-scale CO2 purchase agreement for CCS projects. The federal Canada Growth Fund (CGF) will invest $200 M CAD ($150 M USD) in Entropy, a Calgary-based carbon capture and sequestration (CCS) company, as a part of their efforts to promote decarbonization strategies and technology. The fund has agreed to purchase up to 600,000 tons of Alberta Technology Innovation Emissions Reduction (TIER) credits from Entropy over the course of 15 years at a fixed price of $86.50 CAD ($64.56 USD).
- Compliance instruments surplus persists through Q4. The longstanding surplus of compliance instruments in the WCI market has continued its growth through the end of 2023. Overall, participants in the cap-and-trade program held an excess of 396 M offsets and vintage 2013 through 2022 allowances at the end of 2023. Looking at Q4 2023, compliance entity accounts showed an excess 26 M allowances across all vintages and nearly 1 M offsets for a total surplus of 27 M.
- CITSS registrant accounts increase in Q4, major US banks, hedge funds approved. The total number of California CITSS accounts increased to 805 at the end of December 2023, 331 of which are compliance entities, the highest level seen since Q4 2021. Of the new CITSS additions, JPMorgan Chase, Bank of America Securities, Braeswood Climate Partners, and LMR Master Fund among other notable financial players have opened accounts as general market participants.
Offsets Update
- CARB issued an overall 535,958 carbon offsets in December 2023
- 2,246,375 issued on December 12th
- 189,933 issued on December 26th
- 41,444 of the CCOs issued are listed as DEBs
- 258 million offsets have been issued since inception by CARB and Quebec
California:
Issuance |
ODS |
Livestock |
U.S. Forest |
Urban Forest |
MMC |
Rice Cultivation |
Total |
Nov. '23 |
25,809,966 |
9,128,766 |
206,616,701 |
- |
12,920,104 |
- |
254,475,567 |
Dec. '23 |
25,851,440 |
9,136,973 |
208,516,579 |
- |
13,406,883 |
- |
256,911,875 |
Delta |
41,444 |
8,207 |
1,899,878 |
- |
486,779 |
- |
2,436,308 |
Quebec:
Issuance
|
ODS
|
Landfills |
Covered Manure Storage
|
Active Coal Mines
|
Active Underground Coal Mines
|
Total
|
Nov. '23
|
691,705
|
789,976
|
- |
- |
- |
1,481,681
|
Dec. '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 January 11th, 2023:
- California Carbon Offset (CCO3) - (3 years of Buyer Liability): $16.50
- California Carbon Offset (CCO3 - DEB) - (3 years of Buyer Liability): $31.60
- Golden California Carbon Offset (CCO-G) – Spot Delivery: $17.00
- Golden California Carbon Offset (CCO-G DEB) – Spot Delivery: $32.10
California Carbon Allowances (CCA)
Offsets Pricing as of January 11th, 2023:
- Vintage 2024 – Jan. 2024 Delivery: $40.89
- Vintage 2024 – Dec. 2024 Delivery: $43.14
- Vintage 2023 Average Daily Price (Dec. 2023): $39.43
Market Update
- The average daily price in December 2023 was $39.43, a 2.6% increase compared to the average daily price of $38.44 in November 2023.
- December 2023 allowance pricing continued to reach new program highs despite remaining mostly flat over the month. Starting at $38.22, prices increased by $0.28 in the first week of December. The second week saw a quieter gain of $0.12, followed by little activity in the third, increasing by just $0.02 before the holiday. Prices in the final week of the month opened at $39.70 before posting an overnight gain of $0.41 to the new all-time high $40.11 on Dec. 27th where prices remained through the final week of the year.
- Krane Shares Carbon ETFs (both ETFs) held to 9.3 million shares on January 11th, 2023, compared to 9.6 million carbon allowances on December 11th, 2023, a 3% decrease in the carbon futures holdings. Furthermore, we are still 8.9 million, or 50%, 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: $33.23 per ton |
2022 Highest Daily Price: $33.50 per ton (Jan. 1st, 2022) |
2023 Highest Daily Price: $40.11 per ton (Dec. 27th, 2023) |
Questions? Contact our team for more information: environmental@aegis-hedging.com
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