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News Update
- Q3 Auction to offer 8.6M V23 allowances, APCR 1.1M. The Washington Department of Ecology (ECY) will offer 8,585,000 vintage 2023 allowances in the upcoming auction scheduled for August 30th, 2023. No Vintage 2026 allowances will be auctioned off this quarter, but expected in November 2023 auction as ECY auctions on advanced allowances twice a year. The previous auction in May offered and sold the same volume of allowances, cleating at $56.01. The state will also hold its first cost-containment reserve auction on August 9th, offering 1.1M allowances split equally between the fixed prices of $51.90 and $66.68.
- Washington delays Invenergy carbon lawsuit. Judge Benjamin Settle pushed back the date of Invenergy’s challenge against the state after lawyers for both the state and the company requested more time to prepare. The trial formerly set for January 1st, 2024, will now take place on May 7th, 2024. Invenergy alleges that the state violated the US Constitution's commerce clause, citing discrimination by not receiving any free allowances from the WCA program’s allocation to in-state power generators. ECY argues that Invenergy, who operates the only natural gas-powered generator in the state not owned by a Washington-based company, should not receive free allowances under the cap-and-trade program due to their classification as an electricity wholesaler rather than a public utility. Similar energy program lawsuits against states by power companies have been largely unsuccessful, and this suit could see the same fate in the 2024 hearings if not dismissed.
- Washington announces rulemaking for electricity markets. As a part of a new rulemaking targeted for July 2024, the Washington legislature has announced plans to address electricity imported into the state as covered emissions in the state’s cap-and-invest program. The rulemaking aims to establish compliance obligations for entities importing electricity into the state from centralized electricity markets. Washington’s carbon market already covers electricity imports, but the existing regulations leave uncertainty around which electricity transactions are considered imports and who assumes responsibility for the compliance obligations in these transactions.
WCA Schedule
APCR Auction #1 |
August 9th, 2023 |
APCR Auction #1 Results |
August 16th, 2023 |
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Q3 Auction Notice |
June 30th, 2023 |
Q3 Auction Notice |
August 30th, 2023 |
Q3 Auction Notice |
September 6th, 2023 |
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APCR Auction #2 Notice |
September 8th, 2023 (Tentative) |
APCR Auction #2 |
November 8th, 2023 (Tentative) |
APCR Auction #2 Results |
November 15th, 2023 (Tentative) |
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Q4 Auction Notice |
October 6th, 2023 |
Q4 Auction |
December 6th, 2023 |
Q4 Auction Results |
December 14th, 2023 |
Offsets Update
- The Department of Ecology has approved the American Carbon Registry (ACR) and Climate Action Reserve (CAR) to list offset projects for the state’s cap-and-invest program.
- There are also offsets in WCI-CITSS system that have been approved by California that will likely be available to comply with the Washington program.
WCA Pricing Update
- Allowance pricing as of July 17th, 2023: $63.10 – Vintage 2023, June 2023 Delivery
- Allowance pricing as of July 17th, 2023: $65.50 – Vintage 2023, Dec 2023 Delivery
- The average daily price in May 2023: $63.89 – Vintage 2023, Dec 2023 Delivery
Market Update
- The market has been range bound between $60.00 and $64.00 in the last 30 days after the APCR information was released.
- The APCR auction on August 9th and regular quarter auction on August 30th should provide the market some direction and may remain range bound until then.
- Vintage 2026 allowances have remained between $4.00 - $5.00 below Vintage 2023 allowances and remains a good solution for compliance entities looking to comply with 70% of their 2023 compliance which is due November 1st, 2027.
- The volume of transactions has increased in Q2 vs Q1 and is expected to continue to increase each quarter as more allowances enter the market via auctions and free allocations.
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WCA Pricing (Vintage 2023)
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Prompt Delivery
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Dec. '23 Delivery
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December 2023 Average Daily Price:
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$ 62.80
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$ 65.00
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December 2023 Average Monthly Price (May 2023):
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$ 63.15
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$ 65.47
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December 2023 Highest Daily Price (Apr. 14th, 2023):
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$ 65.00
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$ 70.00
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Questions? Contact our team for more information: environmental@aegis-hedging.com
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