To quickly access the page content, please click on the links below.
News Update
- California-Quebec February auction sets new program high; triggers APCR. The first quarterly joint auction of the year set a record high clearing price of $41.76/t on February 14th, 2024; a 7.8% increase compared to the clearing price of $38.73/t seen in the previous auction held in November 2023. As a result of clearing above the trigger price of $41.40, the Western Climate Initiative (WCI) will offer nearly 67 M allowances at the tier 1 price of $56.20/t, and an additional 90 M allowances at the tier 2 price of $72.21 for a total offering of over 156 M in the upcoming allowance price containment reserve (APCR) auction scheduled for March 27th, 2024.
- California-Quebec set 51 M V24 allowance supply for May auction. WCI will offer 51 M vintage 2024 allowances in the second quarterly auction for 2024 at the price of $24.04/t on May 15th. The auction will also offer 7.2 M vintage 2027 allowances in the advance auction also available at $24.04/t. Allowances in the first quarterly auction cleared at $41.76/t and $41.00/t for vintages 2024 and 2027, respectively.
- California and Canada at risk of missing 2030 reduction targets. The state of California has been able to reduce its emissions by an average of 1.6% per year over the past 5 years. However, the state must reduce its emissions by 4.6% per year to meet the current 2030 reduction target, nearly 3 times the rate of current reductions. The transportation sector remains California’s biggest opportunity for reductions as the state’s largest source of emissions, accounting for nearly 39% of the state’s 2021 emissions, with light-duty passenger vehicles making up nearly 105 M tons. Canada also could miss out on its 40-45% GHG reduction by 2030 target by nearly 33 M tons and would need to reduce its emissions by 439 M tons per year to meet the target. Some cite a lack of confidence in returns in Canada’s carbon markets and lack of a uniform approach in the government’s carbon contracting process as reasons behind the absence of large investments in long-term carbon reduction projects.
- CFTC to finish CO2 offset guidance in July. The US Commodity Futures Trading Commission (CFTC) hopes to finalize guidance for derivates contracts for voluntary carbon offsets within the next few months, according to CFTC chairman Rostin Behnam. The CFTC proposed guidance for futures and options last year to exchanges in hopes of strengthening the integrity of the carbon market, but exchanges such as the Intercontinental Exchange (ICE) and the Chicago Mercantile Exchange (CME) have warned the CFTC that the guidance could take them outside of their depth as exchanges by requiring them to ensure the carbon offsets associated with the derivatives listed on the exchanges adhere to “real, additional, permanent, verifiable” emission reductions. While the guidance is non-binding in its current state, exchanges may be reluctant to list new contracts due to the imposed scrutiny and cost of reviews, which in turn would weaken the developing market. The CFTC is still reviewing public comments regarding the guidance and plan to finalize by July 2024.
Offsets Update
- CARB issued an overall 407,088 carbon offsets in February 2024
- 201,599 issued on January 14th
- 205,489 issued on January 27th
- 242,964 of the CCOs issued are listed as DEBs
- 260 million offsets have been issued since inception by CARB and Quebec
California:
Issuance |
ODS |
Livestock |
U.S. Forest |
Urban Forest |
MMC |
Rice Cultivation |
Total |
Jan. '24 |
25,851,440 |
9,136,973 |
208,755,921 |
- |
13,406,883 |
- |
257,476,568 |
Feb. '24 |
25,851,440 |
9,136,973 |
209,243,005 |
- |
13,925,408 |
- |
258,558,305 |
Delta |
- |
- |
242,964 |
- |
164,214 |
- |
407,088 |
Quebec:
Issuance
|
ODS
|
Landfills |
Covered Manure Storage
|
Active Coal Mines
|
Active Underground Coal Mines
|
Total
|
Jan. '24
|
691,705
|
789,976
|
- |
- |
- |
1,481,681
|
Feb. '24
|
691,705
|
789,976
|
- |
- |
- |
1,481,681
|
Delta
|
- |
- |
- |
- |
- |
- |
ARB Schedule
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 March 15th, 2024:
- California Carbon Offset (CCO3) - (3 years of Buyer Liability): $15.40
- California Carbon Offset (CCO3 - DEB) - (3 years of Buyer Liability): $35.00
- Golden California Carbon Offset (CCO-G) – Spot Delivery: $15.60
- Golden California Carbon Offset (CCO-G DEB) – Spot Delivery: $35.20
California Carbon Allowances (CCA)
Offsets Pricing as of March 15th, 2024:
- Vintage 2024 – Mar. 2024 Delivery: $38.02
- Vintage 2024 – Dec. 2024 Delivery: $43.05
- Vintage 2024 Average Daily Price (Feb. 2024): $41.09
Market Update
- The average daily price in February 2024 was $41.09, a less than 1% increase compared to the average daily price of $40.96 in January 2024.
- Prompt allowances saw an overall decline in pricing over February. Allowances prices started to sink in the first week, opening the month at $41.92 before falling to $41.26. Prices continued downward over the second week moving from $41.18 to $40.75. Prices then dropped by another $0.24 ahead of the most volatile week of the month, starting at $40.51 and slowly trending down to $40.43 on Feb. 21st before experiencing an overnight lift of $0.69 to the month-high of $41.12. Prices in the final week hit the month-low of $39.93 on Feb. 27th before closing the month at $40.58.
- Krane Shares Carbon ETFs (both ETFs) held to 8.8 million shares on March 18th, 2024, compared to 9.2 million carbon allowances on February 14th, 2024, a 4.3% decrease in the carbon futures holdings. Furthermore, we are still 9.7 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 - Mar. 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: $41.92 per ton (Feb. 5th, 2024) |
Questions? Contact our team for more information: environmental@aegis-hedging.com
CONFIDENTIAL – UNAUTHORIZED THIRD-PARTY DISTRIBUTION PROHIBITED