2018 annual auction reserve price notice
See Ontario, Quebec and California’s minimum prices for allowances and the number of allowances to be auctioned in the 2018 calendar year. This notice was issued on December 1, 2017.
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The California Air Resources Board (CARB), the ministère du Développement durable, de l’Environnement et de la Lutte contre les changements climatiques
The 2018 Annual Auction Reserve Prices
|Number of Allowances to be Offered
|CA Annual Auction Reserve Price
|QC Annual Auction Reserve Price
|ON Annual Auction Reserve Price
|Current Auction (2018 vintage)
|Advance Auction (2021 vintage)
Annual Auction Reserve Prices
The Annual Auction Reserve Prices refer to the minimum prices set and published annually by each jurisdiction in accordance with Section 95911 of the California Cap-and-Trade Regulation, Article 49 of the Québec Cap-and-Trade Regulation, and Section 71 of the Ontario Cap-and-Trade Program Regulation. The respective Annual Auction Reserve Prices for California, Québec, and Ontario will be used to determine the Auction Reserve Price for each joint auction by applying the Auction Exchange Rate as discussed below.
The Annual Auction Reserve Price for each jurisdiction is equal to the Annual Auction Reserve Price for the previous calendar year increased by 5% plus the rate of inflation as measured by the Consumer Price Index (CPI). Each jurisdiction uses a jurisdiction-specific CPI in accordance with its respective regulation.
|2017 Annual Auction Reserve Price
|Consumer Price Index
|2018 Annual Auction Reserve Price
Auction Exchange Rate and Auction Reserve Price
Entities registered under the Québec Cap-and-Trade System (QC entities) and under the Ontario Cap-and-Trade program (ON entities) may participate in joint auctions in either United States Dollars (USD) or Canadian Dollars (CAD). To manage multiple currencies, an Auction Exchange Rate is determined prior to each joint auction. The Auction Exchange Rate (USD to CAD) in effect the day of a joint auction and for financial settlement by auction participants will be determined the business day prior to each joint auction and will be displayed in the Auction Platform. The Auction Exchange Rate (USD to CAD FX Rate) in effect for a joint auction will be set as the most recently available daily exchange rate
The Auction Exchange Rate and the Auction Reserve Price (in USD and CAD) effective during a joint auction will be available the business day prior to each joint auction. The Auction Reserve Price will be determined as the higher of the Annual Auction Reserve Prices established in U.S. and Canadian dollars after applying the established Auction Exchange Rate (USD to CAD FX Rate).
Current Auction Allowances Offered for Sale
As indicated in Table 1, the number of allowances to be offered for sale in 2018 Current Auctions includes the approximate number of 2018 vintage allowances to be offered for sale. This number includes the total number of allowances each jurisdiction offers for sale (250,597,647) and the allowances to be consigned by California electrical distribution utilities and natural gas suppliers (consigning entities) (83,961,580). A portion of the total number of allowances offered for sale in 2018 by each jurisdiction, as provided in Table 1, may be offered for sale at each auction. California consigning entities are required to notify CARB 75 days before each auction of the number of allowances they intend to consign. Allowances from California consigning entities not consigned in the first three auctions in 2018 will be included in the November 14, 2018 auction.
The actual quantity of allowances in the Current Auction may fluctuate during the year. Additionally, the vintages and types of allowances offered for sale may vary. There are several factors that may account for these fluctuations and variations in the allowances offered for sale at each auction arising out of each of the jurisdiction’s regulatory provisions. Current Auction allowances may come from allowances issued under the California Cap-and-Trade Program, the Québec Cap-and-Trade System, and the Ontario Cap-and-Trade Program that remain unsold from an undersubscribed
Information on the specific quantity of allowances by vintage and type available for sale in Current Auctions will be made available in each Auction Notice, which is posted at least 60 days prior to each joint auction on the California, Québec, and Ontario auction webpages.
Allowances are transferred to successful bidders following completion of financial settlement. Successful bidders will receive awarded allowances, including the quantity of each allowance vintage or type, based on the proportion of the quantity of each jurisdiction’s contribution to the total allowances offered in the auction. For example, in a simple case where the Current Auction allowances are all the same vintage and if the allowances offered for sale in the Current Auction included 50% California 2018 vintage allowances, 25% Québec 2018 vintage allowances, and 25% Ontario 2018 vintage allowances, each bid lot of 1000 allowances received would include 500 California, 250 Québec, and 250 Ontario allowances.
The same concept applies to a more complex case to determine the composition of each lot of allowances awarded. For example, if the Current Auction includes multiple vintages (continue to assume that the allowances offered are still split 50-25-25 between the jurisdictions) where the Québec portion includes 40% 2017 allowances and 60% 2018 allowances, each awarded bid lot of 1000 allowances would include 500 California 2018 vintage allowances, 250 Ontario 2018 vintage allowances, 100 Québec 2017 vintage allowances, and 150 Québec 2018 vintage allowances. This example can be expanded if there are more than two allowance vintages or types for a jurisdiction.
In a situation where there are not enough allowances awarded of a specific vintage or type offered for sale to evenly distribute across all successful bidders, the number of allowances assigned to successful bidders is determined by multiplying the successful bidder’s share of Current Auction qualified bids by the number of allowances of that specific allowance vintage or type awarded, rounded to the nearest whole number. Assignments of allowances may be adjusted by no more than one allowance added to or removed from the total allowances assigned until the number of allowances assigned to successful bidders equals the number of allowances of the specific vintage or type awarded.
Advance Auction Allowances Offered for Sale
The Advance Auction budget represents 10% of the allowances from each of the jurisdiction’s allowance budgets that are created for the year three years subsequent to the current calendar year. Since the combined annual allowance budget in 2021 is 497,118,000, the Advance Auction combined budget for auctions conducted in 2018 is 49,711,800 2021 vintage allowances. These future vintage allowances will be equally divided for sale across the four Advance Auctions conducted in 2018.
2018 Quarterly Auction Dates
An Auction Notice will be published at least 60 days prior to each auction. The Auction Notice provides information about the number of GHG allowances to be offered and the auction schedule for the applicable auction.
With the Auction Notice, additional background information, detailed instructions, and examples will be available in two supporting documents, which will include information applicable to the 2018 auctions:
- The Detailed Auction Requirements and Instructions document will provide background information on the California Cap-and-Trade Program, Québec Cap-and-Trade System, and Ontario Cap-and-Trade Program, as well as detailed requirements and instructions for participating in a joint auction.
- The Auction Examples document will provide information and examples of how to determine the amount of a bid guarantee, how holding and purchase limits are applied, how U.S. and Canadian currencies are handled, and examples of how joint auctions are settled.
Table 3 provides information specific to the scheduled quarterly auctions.
|Auction Consignment Due Date for Consigning Entities
|Auction Notice Posting Date
Auction Application Period Opens
|Auction Application Due Date
Auction Application Period Closes
|February 21, 2018
|December 8, 2017
|December 21, 2017
|January 22, 2018
|May 15, 2018
|March 1, 2018
|March 16, 2018
|April 16, 2018
|August 14, 2018
|May 31, 2018
|June 15, 2018
|July 16, 2018
|November 14, 2018
|August 31, 2018
|September 14, 2018
|October 15, 2018
For further information about the Annual Auction Reserve Price, the Auction Reserve Price Determination for a joint auction, or the Current Auction and Advance Auction allowance budgets for auctions conducted in 2018, please contact one of the following:
Note: When contacting jurisdiction staff, please take precautions when submitting personal or confidential information. If it is necessary to transmit personal or confidential information, please contact listed jurisdiction staff for information on how to provide this information securely.
- footnote Back to paragraph Ministry of Sustainable Development, Environment and the Fight against Climate Change
- footnote Back to paragraph The term “Annual Auction Reserve Price” will be used throughout this document to refer to the “minimum price” as defined in the Québec and Ontario cap-and-trade regulations.
- footnote Back to paragraph Ontario did not publish a 2017 Annual Auction Reserve Price. The 2018 Annual Auction Reserve Price is established in accordance to Section 71 of the Ontario Cap-and-Trade Regulation.
- footnote Back to paragraph This refers to the daily average exchange rate for U.S. and Canadian dollars as published by the Bank of Canada.
- footnote Back to paragraph An undersubscribed auction is an auction with total qualified bids less than the total allowances offered for sale.
- footnote Back to paragraph For specific treatment of unsold allowances in California’s program, see the Guidance on Treatment of Unsold Allowances on the California auction webpage.
- footnote Back to paragraph In this document, Québec Sales by Mutual Agreement and Ontario sales are both referred to as ‘Reserve Sales’ for simplicity.