Following the Joint Auction 17 results, secondary market prices drop to reflect the auction settlement price (USD 15.31). As front was trading at USD 15.51 the week prior to the latest auction, following the results prices will go through an adjustment period for allowances to become cost competitive with auction settlement price. As auction settlement price was 20 cents lower before the auction, post-auction week sees a drop in CCA prices. The week started off with a 1-cent drop and continued dropping with some intraday volatility until mid-week. On Wednesday, prices dropped 4-cents on average and continued to stand still on the forward curve till the end of the week. As of Friday (11/23), front price (V18 Nov18) is trading at USD 15.50 and benchmark (V18 Dec18) is trading at USD 15.54, both deliveries dropping 4-cents.
ARB recently released 2017 covered emissions data for Californian entities. The combined covered emissions registered a fall of 1.08% from 2016 to 2017. Both Fossil Fuel Electricity generation and Electricity Importers continued to see the highest emissions decline amongst all the sectors.
A primary reason for the decline in emissions in the aforementioned sectors is because of increasing share of renewables in the state’s energy portfolio. In California’s power mix, the total share of renewables increased from 73,961 GWh in 2016 to 84,684 GWh which is a 14.5% annual increase. Special focus should be turned to Transportation Fuel and CO2 suppliers, Cement Manufacturing and Other Combustion sources as we expect these sectors to see increasing emissions in the next decade.
For more information on the methodology used in computing price data, please visit our website.
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