Author Archives: Katie Hsia-Kiung

Strength in Numbers: Linked California-Quebec Market Benefits Environment and Economy

KHK pictureBigger is not always better, but a recent cap-and-trade auction in Quebec gave us one example of why it may be the case for a combined California and Quebec carbon market.

The linkage of Quebec and California’s markets has been watched by many around the world, and the start of joint auctions in November 2014 is the final step in full linkage. Last month, however, both jurisdictions were busy conducting their last solo auctions. While the results of the California-only auction were as anticipated, the Quebec-only auction yielded both expected and less expected results.

What was not a surprise was that not all (83%) allowances offered for sale were purchased. Unlike in the California program, Quebec entities do not have to surrender any allowances this coming November. With their first deadline not until November 2015, Quebec entities have been understandably slow to enter and be active in the market. Another positive and not so surprising takeaway from Quebec’s last auction is high demand for 2017 allowances, a strong sign that Quebec companies are confident in this market’s future health.

More surprising to observers in Quebec’s recent auction, however, was that a higher percentage of 2017 vintage allowances sold than 2014 vintage allowances. Current 2014 vintage allowances can be used for compliance at any time, while 2017 vintage allowances can only be used starting in 2017. This longer useful life should make 2014 allowances more valuable and thus in higher demand, but this did not appear to be the case in the recent auction. Read More »

Posted in Auction revenue, Cap and trade, Cap-and-trade auction results, Climate, Global Warming Solutions Act: AB 32, Linkage| 2 Responses, comments now closed

Results Stay Steady in California’s Last Solo Auction Despite Calls for Fuels Delay

KHK pictureFor many people across the country, August is the last opportunity to enjoy the final bits of summer relaxation before fall sets in and the weather turns colder. While many people are away on vacation, the California Air Resources Board (CARB) and Ministry of Sustainable Development, Environment and the Fight against Climate Change (MDDELCC) of Quebec have been hard at work.

During the first week of this month, the two regulatory bodies held a practice joint auction for interested stakeholders to prepare for California and Quebec to officially join their quarterly auctions in November. A week and a half later, this past Monday, CARB held a California-only auction, the results of which were released today. Next week, MDDLECC will hold a Quebec-only auction, and finish out a very busy month for these linked cap-and-trade programs.

Amidst this flurry of activity, the results of California’s eighth quarterly auction, released today, show that the carbon market remains steady and strong. For the eighth time in a row, all current 2014 vintage allowances offered for sale were purchased. Current allowances sold at the same price as the last auction, $11.50, and 3.15 million more bids were placed than could be filled, reflecting healthy competition for credits. More 2014 vintage allowances were offered in this auction than in both of the previous auctions this year. This uptick in volume was due to the fact that a greater number of utility-owned allowances were turned over to CARB to be sold in this auction as compared to the previous two. 71 entities registered for this auction, which is similar to registration in previous auctions. This implies that there is sustained interest in the market and suggests that covered entities are actively planning how they will comply with the regulation. Read More »

Posted in Auction revenue, Cap and trade, Cap-and-trade auction results, General, Global Warming Solutions Act: AB 32, Linkage, Transportation| 1 Response, comments now closed

Practice Makes Perfect for California and Quebec Joint Auctions

KHK pictureOver many decades, the United States and Canada have developed what is now the largest trade relationship in the world. This achievement is measured by the goods and money that cross their shared border, and does not even account for the trade of ideas and exchange of information currently underway between the two countries. The linkage of the California and Quebec carbon markets is yet another demonstration of the mutually beneficial relationship that these neighboring countries have cultivated. The two jurisdictions are taking the final steps in what started off as a virtual marketplace of ideas and best practices and has since grown into a real market for tradable carbon credits.

Last Thursday, the California Air Resources Board (CARB) and Ministry of Sustainable Development, Environment and the Fight against Climate Change (MDDELCC) of Quebec held a practice joint auction for the linked California and Quebec cap-and-trade programs. This trial was run as though it were a real quarterly auction, requiring participants to establish a Compliance Instrument TrackingSystem Service (CITSS) account if they did not already have one, submit an application to participate, and await approval from the auction administrator. CARB and MDDLECC published an auction notice and ran webinars for auction participants in the days leading up to the practice auction. The auction administrator and independent market monitor for both jurisdictions also monitored the auction while the bidding window was open and the appropriate help desks were available to take questions, just as they would have for a real auction. As such, interested parties were able to become familiar with the actual processes and materials required to participate, as well as test out and provide feedback on the updated features of the auction platform, which was refined to support bidding from both jurisdictions. The careful completion of this important exercise demonstrates CARB and MDDELCC’s dedication to thoroughness in their implementation of the cap-and-trade regulation. Read More »

Posted in Cap and trade, General, Global Warming Solutions Act: AB 32, Litigation| 1 Response, comments now closed

New Report Doesn’t CARE about Getting the Facts Right

With billions of dollars in profits, oil companies can pay a lot of consultants to write a lot of really impressive-looking reports.  But look past the fancy cover page and you will often find these documents are nothing more than spin. Case in point: the recent report from Californians for Affordable and Reliable Energy (CARE) and the Valley Industry and Commerce Association (VICA).

For those looking for the real facts about California’s world-leading climate change law, let us correct the record:

1.       Californians spend LESS on energy than people in 45 states.

 The CARE report uses the usual scare tactics about the price of energy. But the truth is that on average, Californians spend less on their energy bills than residents of 45 other states (see graph below) and almost $60 less than the national average per month. This is due to in-large-part to California’s energy efficiency measures, which have led Californians to use almost 45% less electricity per capita than the U.S. average.

Californians spends less on energy than residents of 45 other states. Source: U.S. Energy Information Administration (EIA)

Californians spends less on energy than residents of 45 other states. Source: U.S. Energy Information Administration (EIA)

 2.       California’s climate law will yield significant environmental AND economic benefits for its citizens.

Not only are the costs of AB 32 policies much smaller than the VICA/CARE report would lead you to believe, California’s climate policies actually yield significant economic and health benefits. Read More »

Posted in Cap and trade, Clean Energy, Climate, Global Warming Solutions Act: AB 32, Jobs, Transportation| 1 Response, comments now closed

California and Quebec: Friends in Low (Carbon) Places

KHK pictureA crucial feature of the U.S. EPA’s groundbreaking new Clean Power Plan for existing power plants is the flexibility with which states can pick and choose the emission reduction measures that work best for them. Instead of prescribing a silver bullet solution across all fifty states, the new rule allows each state to tailor its policies, resulting in the most cost-effective solution to climate change.

According to EPA Administrator Gina McCarthy, this flexibility can mean collaborating with others in joint programs: “If states don’t want to go it alone, they can hang out with other states and join up with a multi-state market based program, or make new ones.”

For states thinking about cross-border collaborations to comply with the new rule, they can find a promising example in California.

In an announcement today, the California Air Resources Board (CARB) and the Ministry of Sustainable Development, Environment and the Fight against Climate Change (MDDLECC) of Quebec revealed that the two markets are taking the final step in linking their markets with the initiation of joint auctions. The first will be held in November, following a practice auction to be held in August. The practice auction will allow the program regulators, as well as auction participants, to get comfortable with the updated joint auction platform.

Not only is the Golden State leading the way in transitioning to a low-carbon economy ahead of EPA’s recently-announced power plant standards, but California is forging ahead to show that working across state lines on climate policies is possible – and can be productive. Read More »

Posted in Cap and trade, Cap-and-trade auction results, Clean Energy, Linkage| Comments closed

Latest Auction Results Show that California’s Cap-and Trade is in Full Swing

KHK pictureThere are certain key fundamentals of swinging a bat that must be mastered before you can hit a home run; proper posture, a strong stance, and good contact with the ball. The last essential step is the follow-through.

In fact, success in nearly everything relies on putting an idea or solution in motion, and then following through to make sure it achieves the goals that it set out to achieve. The same can be said for building a successful cap-and-trade program.

In 2012-2013, California’s cap-and-trade program celebrated a strong launch, during which companies were able to purchase emissions credits through five quarterly auctions and a well-established secondary market. This stretch brought the start of the first compliance period, the first auctions, and the issuance of the first California Air Resources Board-verified offset credits. In 2014, there may not be as many “firsts,” but executing a strong follow-through is as important as a good launch.

Today, the California Air Resources Board (CARB) published the results of the seventh cap-and-trade auction. All current vintage year allowances offered for sale by CARB were purchased, signaling continued confidence in the program. The complete sale of 2014 allowances also demonstrates that some of California’s worst polluters are paying for their emissions.

Bids for 7.8 million more 2014 vintage allowances were placed than could be filled, signifying a competitive current auction. The price for 2014 vintage allowances, which can be used for compliance from now on, was $11.50, which is 16 cents above the minimum floor price of $11.34. Read More »

Posted in Cap and trade, Cap-and-trade auction results, Climate, Global Warming Solutions Act: AB 32| 3 Responses, comments now closed
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