Newsletter: What to Expect from California’s Next Auction?

 

What to expect from California’s third carbon auction?
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What to Expect from California’s Next Auction? 

California’s third carbon allowance auction will take place on Thursday May 16. What is the outlook for clearing prices? How will the revenues be spent? 

Price Outlook: Still Waters Run Deep
I expect this coming auction’s results to be fairly similar to the last auction’s results back in February: healthy demand for current year permits with a clearing price between $13.50 and $14.00, and muted demand for future year’s vintage, which will likely clear at the price floor. Prices have been very stable since the last auction, staying consistently in the $14-$15 a ton range on the secondary market. But history is not guarantee of the future, and  the summer could bring more volatility on the market – read here why.

Auction Revenues: Follow the Money
Understanding California’s auction is no small feat – and yet being able to follow the complex flows of allowances and revenues between the California state government and market participants is essential to the underpinning of the state’s cap-and-trade program. How much money is at stake, and who will benefit from it? Explore our map to finally understand the ins and outs of auction dynamics and revenue allocation.

California to Link with Quebec
California is not alone anymore – the Golden State’s carbon market will officially be ‘linked’ with Quebec starting January 1st, 2014. Why Quebec, and what are the implications for the California market? Will California link with other markets? Read our analysis of what this means for California.

One market California is probably not going to link with any time soon is the EU ETS. Times are tough for climate policy in Europe, and the market has been getting a beating from lawmakers in Brussels. After the EU ETS crash – Is California headed the same way? Read more about the commonalities and differences between California and the EU ETS, and why California should avoid the main pitfalls EU regulators are now struggling with.

Emilie Mazzacurati, Managing Director, Four Twenty Seven

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