On August 23, 2016, the Quebec and California Governments announced the results of the eighth Cap and
Trade System Joint Auction, held earlier this month. The results
show that only around 35% of the available greenhouse gas
allowances (credits) offered for sale were purchased. Many of the
credits that were sold in California were consigned by utilities,
meaning that revenues did not go to the Government. In total, the
Quebec and California Government proceeds from the auction were
much less than may have been expected.
This is the second consecutive auction where many credits have
gone unsold. As we discussed in an earlier
post, only around 10% of the credits offered for sale in May
2016 were sold. Once again, as discussed in commentary found here and here, it seems that factors such as
over-supply of credits already sold and uncertainty about the
future of the cap and trade program in California have contributed
to weak sales of credits in the August 2016 auction.
