US: ARB reschedules auction for 25 November

The Air Resources Board (ARB) announced Friday that it has rescheduled its first joint auction with Quebec for 25 November with the results released on 3 December.

The ARB, the cap-and-trade regulator, was scheduled to auction off 23.1m Vintage 2014 and 10.8m Vintage 2017 allowances on 19 November, but technical difficulties caused the ARB to cancel that auction on Wednesday ( see EDCM 19 November 2014 ).

According to the ARB, the technical difficulties prevented some participants from submitting bids during the first joint auction between Quebec and California. Market participants confirmed those issues to ICIS earlier this week.

The ARB said Friday that the auction would be rescheduled for 25 November, and only bidders qualified for the 19 November would be able to participate. The ARB said the results would be released on 3 December and the allowances would be delivered to auction winners on 23 December.

Market participants had been eagerly awaiting the rescheduled date because of concerns about the December InterContinental Exchange (ICE) delivery deadline on 30 December and the upcoming February consignment date on 5 December.

Traders said the delayed auction could cause some sellers to miss the December delivery deadline for ICE contracts, and those fears sparked some artificial shortages in the secondary market. The Dec ‘14 Vintage 2014 allowances rose $0.11/tCO2e to $12.26/tCO2e because of those concerns.

Some traders said the contract could continue to rise until the ARB announced a new date.

Investor-owned utilities, who must consign allowances, wanted final results before the consignment date in order to know their auction awards and market value for California carbon allowances. Traders said results after the 5 December date could impact consignment amounts or demand for the February auction.

Traders had mixed opinions about the impact of the rescheduled date on the auction clearing price. Most, however, still thought the Vintage 2014 allowances would clear in the $11.75-11.90/tCO2e range. Dan X. McGraw