The Air Resources Board (ARB) in California has held its fourth auction of greenhouse gas allowances on August 16, 2013 and announced the results of the same.
The auction included the auction of 2013 vintage allowances and 2016 vintage allowances. At each auction, California offers current year allowances as well as allowances that can be banked for use in future years. The four auctions that have been held by California so far has raised nearly $396 million till date.
The 2013 auction clearing price was $12.22 per allowance, with 13,865,422 total allowances sold. The 2016 auction clearing price was $11.10 per allowance with 9,560,000 total allowances sold.
While the 2013 auction clearing price was 13% below May’s clearing price, this low price was expected since market participants believe that there will be a rule change in the cap-and-trade regulation that would increase free allowances to industry and natural gas emitters in the second compliance period.
For the first time, all the 2016 futures on offer, were sold at a clearing price of $11.10 over the floor price $10.71. Over 95% of the 2016 allowance futures were purchased by regulated businesses, not speculators, another clear indication that big polluters have started buying credits for their post 2016 obligations.