August 2024 auction results
The third auction of the year was held on August 14.
The final sale price of emission units for the current vintage was set at US$30.24 (CAN$41.50), while the price for the future vintage was set at US$29.75 (CAN$40.83). Compared to the previous auction, this represents a decrease of US$6.78 (-18.3%) for present-year units and US$8.60 (-22.4%) for future-year units. Detailed results are available here.
Assessment of CATS operating parameters: consultations ongoing in California
The governments of California and Quebec issued separate market notices in mid-October. These notices, while not exhaustive, detail the main amendments that regulators plan to include in their respective formal regulatory proposals. The Government of California is considering the removal of at least 180 million emission allowances issued between 2026 and 2030. The Government of Quebec is suggesting the removal of 17 million emission allowances from its future offering. Quebec also mentioned the reduction in the maximum percentage of offsets that can be used for compliance purposes in the future.
Proposed regulations are to be published in California by the end of the year and in Quebec in early 2025. These publications will be followed by a consultation period to share comments with the different jurisdictions.
The objective of the change in Quebec is to ensure the long-term relevance of the CATS and to make sure that it remains an effective tool for achieving the 2030 target for greenhouse gas emission reductions and for ensuring carbon neutrality by 2050 in Quebec. California has the same goal and is taking this same step to ensure that its regulations remain aligned with its climate objectives.
Changes in CATS prices over the past three months
Driven mainly by the expectation by CATS participants of new information on forthcoming regulatory changes , the secondary market experienced a slowdown until mid-August, resulting in a downward trend and volatility.
A recovery has been observed since, due to renewed enthusiasm among joint market players as we approach the release of proposed regulatory changes in California and Quebec.
This enthusiasm peaked after the respective California1 and Quebec2 market notices were released on October 15. Three days after the release, the spot price was US$38.54. This is almost 25% higher than the year’s lowest price of US$30.85 on August 21.
For reference, the highest price reached in 2024 is US$41.91 on February 5, 2024.
Draft regulation amending the Regulation respecting mandatory reporting of certain emissions of contaminants into the atmosphere (RMRCECA)
The Government of Quebec released proposed amendments to the RMRCECA in mid-September. These regulations include the provision of data used in the Greenhouse Gas Cap-and-Trade System (CATS). To ensure the CATS works well, several amendments to the RMRCECA are being proposed.
In addition to the annual update of emission factors to account for changes to power plants in other provinces and in U.S. states (from which we import electricity), several other changes focus primarily on biomethane:
- A precise definition of biomethane
- A mechanism for reporting CO2 emissions from methane use
- Addition of a protocol outlining the criteria to be met and the information and documents to be submitted to report biomethane
- Modification of some protocols to account for biomethane
The proposed regulations were subject to public consultation, which concluded on October 26. There is currently no target date for the publication of the amendment.