US: August auction volume highest since 2012

23 June 2014 21:52 Source:ICIS

The Air Resources Board (ARB) will auction 22.5m current allowances, a 33% increase from the previous auction, and 9.3m future allowances in its third carbon auction of the year, it announced Thursday.

The ARB, the cap-and-trade regulator, will sell a total of 31.8m current and future allowances for a minimum price of $11.34/tonne of CO2 equivalent during the 18 August auction. The total auction supply marks the highest amount since the California regulator auctioned 62.6m allowances during the November 2012 auction.

The number of current allowances on offer is also the highest total since the inaugural November 2012 auction, when the ARB sold 23.1m Vintage 2013 allowances. The previous auction offered 16.9m current allowances, with 13.2m allowances coming from investor-owned utilities (IOUs), who are required to consign credits to auction and use the proceedings to ensure ratepayers are not impacted.

The state has auctioned off between 2.2-2.7m allowances over the past six auctions, meaning in August the share from IOUs and publicly-owned utilities, who can also consign allowances to auction, could be as high as 20m allowances.

The ARB did not release a breakdown of allowances consigned to auction.

Future allowances on offer remained flat at 9.3m. In May, future vintages failed to sell out ( see EDCM 22 May 2014 ).

Current vintages sold out during the May auction with a bid-to-allowance ratio of 1.46, or roughly 24.7m bids.

The auction will be the last one prior to the ARB’s first partial compliance deadline. Compliance entities will have to surrender 30% of their 2013 emissions on 1 November.

The auction results are set to be released on 21 August. Silvia Molteni

By Silvia Molteni