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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 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.
- California-Quebec GHG market volume down 6% in 2023. The California-Quebec cap-and-trade market recorded ~381 M metric tons worth of allowances and offsets transferred over 2023, a 6% decrease of from the 406 M transferred in 2022.
- California senator pushes for new rules over voluntary offset accountability. California Senator Monique Limon (D) introduced SB 1036, a bill designed to make it unlawful for anyone to certify, issue, market, or sell voluntary carbon offsets if they know, or should know, that the offsets do not actually reduce or remove the emissions claimed. SB 1036 mirrors a similar bill proposed by Limon in 2023 that was ultimately vetoed by Gov. Newsom, stating that the bill “could inadvertently capture well-intentioned sellers and verifiers of voluntary offsets” and put the market at risk.
- CARB and Senate committee talk GHG targets & rulemakings. The California Senate’s Environmental Quality and Budget & Fiscal Review Committee held a joint hearing on Feb. 13, 2024, to discuss CARB’s rulemaking plans for the year. Though CARB reiterated that the agency is still making decisions on whether to keep the current 40% by 1990 levels reduction target or implement a more stringent 48% or 55% target instead, speculators believe CARB will likely choose between maintaining the current 40% target or opt for the 48% target. CARB further stated its intention to focus on cost containment measures and the prevention of emissions leakage in workshops scheduled for 2024, with rulemakings expected to be finalized by the end of the year.
Offsets Update
- CARB issued an overall 239,342 carbon offsets in January 2024
- None issued on January 9th
- 239,342 issued on January 23rd
- 239,342 of the CCOs issued are listed as DEBs
- 257 million offsets have been issued since inception by CARB and Quebec
California:
Issuance |
ODS |
Livestock |
U.S. Forest |
Urban Forest |
MMC |
Rice Cultivation |
Total |
Dec. '23 |
25,851,440 |
9,136,973 |
208,516,579 |
- |
13,406,883 |
- |
256,911,875 |
Jan. '24 |
25,851,440 |
9,136,973 |
208,755,921 |
- |
13,406,883 |
- |
257,476,568 |
Delta |
- |
- |
239,342 |
- |
- |
- |
239,342 |
Quebec:
Issuance
|
ODS
|
Landfills |
Covered Manure Storage
|
Active Coal Mines
|
Active Underground Coal Mines
|
Total
|
Dec. '23
|
691,705
|
789,976
|
- |
- |
- |
1,481,681
|
Jan. '24
|
691,705
|
789,976
|
- |
- |
- |
1,481,681
|
Delta
|
- |
- |
- |
- |
- |
- |
ARB Schedule
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 February 14th, 2024:
- California Carbon Offset (CCO3) - (3 years of Buyer Liability): $16.10
- California Carbon Offset (CCO3 - DEB) - (3 years of Buyer Liability): $32.10
- Golden California Carbon Offset (CCO-G) – Spot Delivery: $16.60
- Golden California Carbon Offset (CCO-G DEB) – Spot Delivery: $32.60
California Carbon Allowances (CCA)
Offsets Pricing as of February 14th, 2023:
- Vintage 2024 – Feb. 2024 Delivery: $41.02
- Vintage 2024 – Dec. 2024 Delivery: $43.09
- Vintage 2024 Average Daily Price (Jan. 2024): $40.96
Market Update
- The average daily price in January 2024 was $40.96, a 3.9% increase compared to the average daily price of $39.43 in December 2023.
- Prompt pricing saw a notable increase in the first week of January, opening at $39.96 on January 2nd and reaching $40.62 to end the week. Prices then continued to climb over the weekend into the second week of the month, starting at $41.02 before dipping to $40.74. Prices posted modest gains in the third week, retracing up to $41.55 on January 19th, before experiencing more price fluctuations in the fourth week, varying by nearly $0.20 per day, averaging at the $41.20 level. Pricing reached the month-high for January on the 29th, settling at $41.66 before touching down at $41.48 to close the month.
- Krane Shares Carbon ETFs (both ETFs) held to 9.2 million shares on February 14th, 2024, compared to 9.3 million carbon allowances on January 11th, 2024, a modest 1% decrease in the carbon futures holdings. Furthermore, we are still 9.3 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 - Feb. 2024 to Present)
|
|
2023 Average Daily Price: $32.88 per ton |
2024 Average Daily Price: $41.17 per ton |
2023 Highest Daily Price: $39.38 per ton (Dec. 11th, 2023) |
2024 Highest Daily Price: $41.91 per ton (Feb. 5th, 2024) |
Questions? Contact our team for more information: environmental@aegis-hedging.com
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