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WCA Schedule
- Q1 Auction Application Deadline
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February 5, 2024 |
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February 23, 2024 |
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March 6, 2024 |
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March 13, 2024 |
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- Q2 Auction Application Deadline
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May 6, 2024 |
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May 24, 2024 |
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June 5, 2024 |
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June 12, 2024 |
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- Q3 Auction Application Deadline
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August 5, 2024 |
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August 23, 2024 |
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September 4, 2024 |
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September 11, 2024 |
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- Q4 Auction Application Deadline
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November 4, 2024 |
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November 22, 2024 |
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December 4, 2024 |
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December 11, 2024 |
News Update
- Washington announces first auction of 2024. The Washington Department of Ecology (ECY) will offer nearly 7.4 M allowances in the first quarterly auction of the year scheduled for March 6th, 2024. The current auction will supply 6.8 M vintage 2024 allowances alongside 670,000 vintage 2023 allowances. As ECY has updated auction pricing for 2024, the allowances will be sold at the new minimum price of $24.02 and will trigger an allowance price containment reserve (APCR) sale in May 2024 if sold above the Tier 1 trigger price of $56.16. The previous auction in December 2023 sold all 7.1 M allowances in the current auction at a price of $51.89.
- Washington exercises emergency rule amending APCR allowances. ECY has adopted amendments to the cap-and-trade program clarifying language regarding APCR operations and holding limits. Allowances purchased from reserve sales are now required to go directly into the purchaser's compliance account. Allowances in these accounts can only be used for compliance obligations, meaning they cannot be sold or traded on the secondary market, and by extension, restricts participation in the reserve sales to compliance entities. The existing holding limits for vintage allowances will now also apply to “vintageless” allowances, meaning allowances purchased in reserve sales will count towards the overall account holding limit. In addition, auction administrators will reject bids in auction sessions that would lead to any entity receiving allowances to exceed their holding limit.
- Washington bill challenges anti-cap-and-trade initiative. Washington senator Mark Mullet (D) is advocating a bill designed to curb cap-and-trade compliance costs and lower fuel prices in the state in response to allowance pricing averaging over $50 per ton in 2023. The bill, WA SB5783, aims to accomplish this by tapering the emissions cap reduction target down to 3.6% per year of the program’s baseline emissions from 2023-2049 while maintaining the overall 2050 reduction target. Legislation of the bill could face some difficulties as a separate ballot initiative to repeal the cap-and-trade program has gathered over 470,000 signatures and could appear in November 2024 if it receives 325,000 more. The ballot initiative would repeal provisions of the Climate Commitment Act that established the state’s cap-and-trade program and prohibit any state or local agency from implementing a similar trading system. However, under Washington state law, SB5783 could be interpreted as an alternative to the ballot initiative, which would potentially place it alongside the initiative before voters in November.
- Washington issues first set of carbon offsets. ECY has issued the first set of Ecology Offset Credits (EOC) under the state’s cap-and-trade program. Nearly 140,000 EOCs were issued to Tradewater, and a little over 109,000 EOCs were issued to A-Gas, both using the Ozone Depleting Substances (ODS) protocol adopted by ECY. The state only allows entities to use carbon offsets that provide direct environmental benefits (DEBS) to the state to meet their compliance targets, and these DEBS EOCs can only contribute towards 5% of their emissions obligations, with another 3% allowed from offset projects on federally recognized tribal lands, during the first compliance period ending in 2026.
Offsets Update
- ECY has issued nearly 250,000 Emission Offset Credits (EOCs) in its first set of carbon offsets to two projects, both using the ozone depleting substances (ODS) protocol.
- In the first compliance period from 2023-2026, no more than 5% of an entity’s compliance obligation may be met using EOCs, however an additional 3% may be met by EOCs that are generated from offset projects on federally recognized tribal land.
- Washington requires carbon offsets used for compliance to provide direct environmental benefits to the state (DEBS) but proposed draft legislation could loosen this requirement to also include offsets that provide DEBS to linked jurisdictions.
WCA Pricing Update
Pricing as of January 11th, 2023:
- Vintage 2024 – Jan. 2024 Delivery: $48.10
- Vintage 2024 – Dec. 2024 Delivery: $50.75
- Vintage 2023 Average Daily Price (Dec. 2023): $52.66
Market Update
- Dec-23 allowances saw a significant drop from $54.94 down to $52.40 over the first week of the month, likely due to the quarterly auction held on Dec. 6th. Pricing in the second week inched up to $52.90 before returning down to $52.25 on Dec. 13th and dropping by another $1.25 down to $51.00 on Dec. 15th, marking the lowest prices seen since March 2023. Prices through the third week steadily returned to the $52.00 level where they remained over the holiday week to close out the month.
- All 7.1M vintage 2023 allowances offered in the quarterly auction held on Dec. 6th cleared at $51.89, just $0.01 below the Tier 1 APCR trigger price, marking the second lowest auction settlement price seen in the program the February auction which cleared at $48.50.
- ECY has also updated the auction prices for 2024. Each year the adjustment factor is determined by adding 5% plus the rate of inflation as measured by the most recently available 12 months of consumer price index data for urban consumers on the first business day in December each year.
2024 Auction Price Updates
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Floor Price
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$ 24.02
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Ceiling Price
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$ 88.15
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Tier 1 Trigger Price
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$ 56.16
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Tier 2 Trigger Price
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$ 72.15
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Figure 1. WCA Daily Transactions (Jan. 2023 to Present)
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WCA Pricing (Vintage 2023)
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Dec. '23 Delivery
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Prompt Delivery
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Average Daily Price (2023):
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$ 56.81
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$ 58.24
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Average Monthly Price (December 2023):
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$ 52.66
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$ 52.66
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2023 Highest Daily Price:
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$ 70.00 (Apr. 14th, 2023)
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$ 67.75 (Aug. 22nd, 2023)
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Questions? Contact our team for more information: environmental@aegis-hedging.com
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