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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 held 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, with results August 16th.
- Washington considering GHG buying limit adjustment. The state of Washington prevents sources covered by the state's carbon market from purchasing more than 10% of the allowances offered at any particular auction, while California's program employs a much looser 25% limit. Policymakers stated the changes are likely to be revisited next year alongside linkage considerations.
- Nodal to launch Washington Carbon & CFS futures. Nodal, with developer IncubEx, plans to add new Washington Carbon Allowances (WCA) vintage specific and Washington Clean Fuel Standard (CFS) futures contracts to the trading platform on August 11th. The new contracts will appear alongside the existing WCA futures and option contracts listed in December 2022 and January 2023.
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 August 14th, 2023: $66.10 – Vintage 2023, August 2023 Delivery
- Allowance pricing as of August 14th, 2023: $68.25 – Vintage 2023, Dec 2023 Delivery
- The average daily price in July 2023: $63.48 – Vintage 2023, Dec 2023 Delivery
Market Update
- Dec. ‘23 allowance prices fell in early July, coming down from the previous high of $67.15 and settling in the $65.00 range through the second week of July following the announcement of the APCR sale. Prices then began slowly trending upwards to $67.00 through the end of the month before posting a new all-time high of $67.50 to open the month of August. December 2023 allowances are now trading 59% higher than where they began the year and the market may continue to move ahead of the quarterly auction set for August 30th and as the results from APCR sale held on August 9th are released.
- Vintage 2026 allowances have remained between $4.00 - $5.00 below Vintage 2023 allowances and remains a good solution for compliance entities looking to comply with 70% of their 2023 compliance which is due November 1st, 2027.
- Traded volume in secondary market is expected to continue to increase each quarter as more allowances are released in the market via the auctions and the free allocations later this year
Figure 1. WCA Daily Transactions (Dec. 2022 to Present)
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WCA Pricing (Vintage 2023)
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Prompt Delivery
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Dec. '23 Delivery
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Average Daily Price (YTD):
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$ 60.97
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$ 56.37
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Average Monthly Price (July 2023):
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$ 66.02
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$ 63.74
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2023 Highest Daily Price:
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$ 66.10 (Aug. 14th, 2023)
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$ 70.00 (Apr. 14th, 2023)
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Figure 2. WCA Open Interest (July 2023 to Present)
Questions? Contact our team for more information: environmental@aegis-hedging.com
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