(The Center Square) – The Washington State Department of Ecology has announced a second emergency auction triggered by last week’s third quarterly carbon auction that brought in $541 million.
“Because the auction settlement price was above $51.90 (the trigger price for 2023), an auction of allowances from the Allowance Price Containment Reserve (APCR) will be held on Nov. 8,” reads a news release from Department of Ecology Spokesperson Claire Boyte-White. “The formal APCR Auction Notice will be published to the Ecology website at noon PST on Sept. 8.”
APCR auctions are meant to help minimize allowance price volatility. The APCR is a separate pool of allowances made available when the prices at a quarterly auction exceed a certain level.
Credits in these special auctions can only be used for emissions compliance reasons. They cannot be traded on the open market.
APCR allowances can be used to cover emissions from any year, making them valuable for emitters spending them in their compliance accounts.
The first APCR auction was held on Aug. 9. The closed-bid, fixed-price auction consisted of two 527,000 credit tranches, with the first tranche priced at $51.90 per credit and the second at $66.86 per credit.
Add up those two tranches for a total of 1,054,000 carbon credits sold for a grand total of just under $62.5 million.
The second APCR auction is only offering one tranche, at $51.90 per allowance, and is “frontloading” the auction with 5 million allowances, which means it could potentially bring in $259.5 million.
Per the Climate Commitment Act passed by the state Legislature and signed into law by Gov. Jay Inslee in 2021, Washington’s cap-and-trade program requires emitters to obtain “emissions allowances” equal to their covered greenhouse gas emissions. Similar to stocks and bonds, these allowances can be obtained through quarterly auctions hosted by the Department of Ecology.
The four auctions held so far – three quarterly auctions and one APCR auction – have generated more than $1.4 billion.
