Introducing: Stillwater’s C&T Newsletter

December 5, 2022 By , ,

December 5, 2022

We are excited to announce the inaugural edition of our latest publication: Stillwater’s California Cap and Trade (C&T) Newsletter. Stillwater’s C&T Newsletter will provide subscribers insight into the allowance and offset demand and price trends.

We’re kicking off this publication with an abbreviated, complimentary edition of Stillwater’s C&T Quarterly Auction Summary which presents the results of the fourth quarter auction held on November 16th. In this inaugural edition, we track California Carbon Allowances (CCA) and California Carbon Offsets (CCO) transfer trends.

Stillwater’s C&T Newsletter also reports on trends concerning Cap at the Rack (CAR) – the C&T assessment of greenhouse gases (GHGs) from the use of fossil transportation fuels. The C&T allowance obligation is applied to fuels when they enter commerce – typically when these fuels are loaded at the product terminals (hence “Cap at the Rack”) into trucks for delivery to retail or end-user sites. CAR becomes the obligation of the compliance entity that owns the fuel just prior to loading. CAR is additive to the California Low Carbon Fuel Standard (LCFS) assessments which we track in Stillwater’s LCFS Newsletter.

Similar to the quarterly editions of Stillwater’s LCFS and Oregon Clean Fuels Program (CFP) Newsletters, future editions of Stillwater C&T Quarterly Auction Summary (AKA Stillwater’s C&T Newsletter) will also include our expert analysis of the C&T Program.

But wait, there’s more!
In addition to our C&T Newsletter, we are putting the finishing touches on Stillwater’s C&T Credit Price Outlook. This forecast will offer price projections for CCAs, CCOs, and CAR, expanding our suite of existing credit price outlooks which include forecasts for the LCFS, CFP, BC-LCFS, and RFS programs. Our view on the allowance demand for Fuels Under the Cap (FUC) is built upon our “ground-up” gasoline, jet, and diesel demand and mix analysis used in our LCFS credit price outlook.

We want to hear from you!
If you’d like to be notified when this subscription service is officially launched or when our C&T Outlook will be published, sign up using the form below! We would also love to hear what else you would like to see in these publications to make them the most useful to you. Without further ado, enjoy this complimentary inaugural edition of Stillwater’s C&T Quarterly Auction Summary.

Notify me when the C&T Outlook and Subscription launches!

Without further ado, enjoy this complimentary inaugural edition of Stillwater’s C&T Quarterly Auction Summary.


Analysis of 4Q2022 California Cap & Trade (C&T) Auction

In this edition:

  • Current CCA Settlement: Settlement price was $26.80/MT, down from $27.00/MT the previous quarter.
  • Advanced CCA Settlement: Settlement price was $26.00/MT down from $30.00/MT the previous quarter.
  • Volume Trends: Offered volumes of 58,020,854 MT current and 7,942,750 MT advanced were fully subscribed. The coverage ratios were 1.80 and 2.35 respectively.

The Stillwater C&T Auction Newsletter presents our analysis of the Cap and Trade (C&T) Program Auction and Program. Analysis of the data provides insight into the allowance demand and price trends. In addition to the current auction and the auction trends, we also track the California Carbon Allowances (CCA), California Carbon Offsets (CCO), and Cap at the Rack (CAR) trends. CAR is the C&T assessment of GHG from the use of fossil transportation fuels.

Quarterly Auction Summary and Trends

The fourth quarter joint auction of allowances was held on November 16, 2022. A total of 58,020,854 metric tons (MT) of 2022 allowances were sold at a settlement price of $26.80/MT which was down from $27.00/MT in the third quarter auction. In the advanced auction, 7,942,750 MT of allowances were sold at a settlement price of $26.00/MT, down from $30.00/MT in the third quarter. Both the current and advanced auctions were fully subscribed.

The settlement prices for the current and advanced CCAs were $7.10/MT and $6.30/MT above the auction reserve price, respectively. The history of current and advance auction settlement prices and the auction reserve price are shown in Figure 1 below.

Figure 1: Cap & Trade Quarterly Auction Results

The allowance volumes offered in the current and advanced auctions are shown in Figures 2 and 3 along with the coverage ratio for each. The coverage ratio is the total qualified bid allowance volume divided by the allowance volume offered. The coverage ratio is an indication of the auction demand for allowance. A coverage ratio less than 1.0 indicates that the auction was not fully subscribed. The coverage ratio increased in the fourth quarter to 1.80, up from 1.29 in the previous quarter, while the advanced coverage ratio decreased to 2.35 from 2.51.

Figure 2: Current Auction Offered and Coverage

Figure 3: Advanced Auction Offered and Coverage

There were 113 bidders that qualified for the fourth quarter auction. The number of qualified bidders was down from the last three quarters but remains higher than historical levels. The percentage of allowances purchased by covered entities was 80.4% and 83.3% in the current and advanced auctions, respectively. The current auction was down from 87.6% in the third quarter while the advanced auction was up from 82.3%. The trends of qualified bidders and percent purchased by covered entities are shown in Figure 4.

Figure 4: Number of Qualified Bidders and Percent Purchased by Covered Entities

Figures 5 and 6 below show the bid trends for the settlement, maximum, and minimum bid prices, and the allowance-weighted median bid price for the current and advanced auctions. The current auction fourth quarter maximum and minimum bid prices remained steady with the third quarter prices at $60.06/MT and $19.70/MT, respectively, while the median bid price decreased to $27.37/MT from $29.76/MT the previous quarter. The advanced auction maximum and median bid prices both decreased in the fourth quarter to $34.00/MT and $23.44/MT down from $40.00/MT and $24.77/MT in the third quarter, respectively.

Figure 5: Current Auction Bid Price Trends

Figure 6: Advanced Auction Bid Price Trends

Figure 7 below portrays the trend of the secondary market, current auction, and auction reserve prices. This chart is posted on CARB’s website and reproduced here. The chart indicates that secondary market and auction settlement prices hovered close to the auction reserve price until mid-2021 when the values started to escalate to the current level. In the marketplace, California Cap and Trade Allowances are called California Carbon Allowances (CCA) and the California Cap and Trade Offset generated by approved offset projects are called California Carbon Offsets (CCO).

Figure 7: Secondary Market Price Auction Prices, and Auction Reserve Prices 

Market Transfers

The Compliance Instrument Tracking System Service (CITSS) is a management and tracking system for accounts and compliance instruments issued through participating Western Climate Initiative (WCI) cap-and-trade programs. Aggregated data of transfers of current and advanced CCAs and CCOs by project type are reported in CARB’s Market Transfers Report (MTR) each quarter.
CARB published the third quarter CITSS MTR on November 1st. There were 80,614,137 MT of current vintage CCAs, 10,967,000 MT of future vintage CCAs, and 14,376,587 MT of CCOs transferred. The current and advanced CCA volumes transferred were up 32% and 38%, respectively, from the second quarter of 2022. The weighted average price of transfer was $27.17 per current CCA, $27.12 per advanced CCA, and $18.73 per CCO. These prices represent decreases for current and advanced CCAs from the $29.71/MT and $29.87/MT in the second quarter, but an increase for CCOs from $16.95/MT.

The trends of the market transfer quantity and number of transfers for current CCAs, advanced CCAs, and CCOs are shown in Figure 8.

Figure 8: CITSS Transfers by Quarter

The trends of the current CCA, advanced CCA, and CCO weighted average price are shown in Figure 9. The figure illustrates that the weighted average transaction price for current and future CCAs has been declining since the fourth quarter of 2021, and CCOs’ weighted average transaction price has been increasing over the same period.

Figure 9: Transaction Weighted Average Price

C&T Allowance Price and the Cost of Cap at the Rack

To account for the tailpipe GHGs emitted from the transportation sector, fossil fuels used in transportation are assessed a C&T allowance obligation when they enter commerce. Typically, this is when these fuels are loaded at the product terminals into tank trucks for delivery to retail or user sites. Thus, this assessment is dubbed “Cap at the Rack” (CAR) and becomes the obligation of the compliance entity.

The cost of CAR is a fuel-specific GHG emissions factor for the fuel times the CCA price. Figure 10 illustrates the trend of the prompt current CCA price and the resulting CAR for CARBOB and ULSD.

Figure 10: CCA Allowance Prompt Price and Cost of Cap at the Rack


Stillwater also offers credit price outlooks for California’s Low Carbon Fuel Standard (LCFS), Oregon’s Clean Fuels Program (CFP), British Columbia’s LCFS (BC-LCFS), and the U.S. Renewable Fuel Standard (RFS). Contact us to learn more!

©2023 Stillwater Associates LLC. All rights reserved.

The California Cap and Trade (C&T) Auction Newsletter is a publication of Stillwater Associates LLC. Stillwater Associates LLC also publishes a California Low Carbon Fuel Standard (LCFS) Newsletter. For more information, please visit our website:

Information contained in this publication has been obtained from sources believed to be reliable. However, because of the possibility of human or mechanical error by sources, Stillwater Associates LLC, or others, Stillwater does not guarantee the accuracy, adequacy, or completeness of any such information, and is not responsible or liable for any errors or omissions or results of use of such information or reliance upon it.

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