Background

The Ontario Ministry of the Environment and Climate Change (MOECC) held the first auction of greenhouse gas (GHG) allowances on March 22, 2017. The auction included a Current Auction of 2017 vintage allowances and an Advance Auction of 2020 vintage allowances. The information provided in this report is a balance between the need for program transparency and protection of individual auction participants’ market positions.

Prior to the certification of the auction, MOECC staff and an independent market monitor evaluated the bids and determined that the auction process and procedures complied with the requirements of The Ontario Cap and Trade Program Regulation (Regulation). As provided below, the Market Monitor made the following findings:

The Market Monitor found that the auction was cleared consistent with the auction clearing rules in the Regulation. To address potential market manipulation or collusion, the Market Monitor also uses a number of economic analysis tools to evaluate the auction results. The Market Monitor confirmed the clearing price and clearing quantities by participant for the Current Auction of 2017 vintage allowances and for the Advance Auction of 2020 vintage allowances. The auction algorithm correctly applied the Regulation requirements covering the bid guarantee. The Market Monitor did not observe any breaches of security or communication protocols. The Market Monitor recommended that MOECC approve the March 2017 Ontario Auction #1 results.

Summary Results

The first table below provides key data and information on the results of the auction. The second table provides qualified bid summary statistics from the auction. Please see Explanatory Notes at the end of this report for descriptions of all summary information.

Table 1: Auction Results for March 2017 Ontario Auction #1
Auction ResultsCurrent 2017 VintageFuture 2020 Vintage
Total Allowances Available for Sale25,296,3673,116,700
Total Allowances Sold25,296,367812,000
Total Qualified Bids Divided by Total Allowances Available1.160.26
Proportion of Allowances Purchased by Capped Participants99.1%100%
Herfindahl-Hirschman  Index1,7059,211
Table 2: Qualified Bid Summary Statistics for March 2017 Ontario Auction #1
Qualified Bid Summary StatisticsCurrent 2017 VintageFuture 2020 Vintage
Ontario Auction Reserve Price (CAD)$18.07$18.07
Settlement Price (CAD)$18.08$18.07
Maximum Price (CAD)$49.41$27.69
Minimum Price (CAD)$18.07$18.07
Mean Price (CAD)$23.66$24.75
Median Price (CAD)$19.00$19.53
Median Allowance Price (CAD)$20.25$23.02
Auction Exchange Rate1.3317

List of Qualified Bidders for the Current Auction of 2017 Vintage Allowances and the Advance Auction of 2020 Vintage Allowances

A Qualified Bidder is a participant that completed an auction application, submitted an acceptable bid guarantee, and was approved by MOECC to participate in the auction.

CITSS Entity ID NumberParticipant Legal Name
ON2151Suncor Energy Products Partnership
ON2161CRH Canada Group Inc.
ON2162Goodyear Canada Inc.
ON2164NGL Supply Co. Ltd.
ON2165Union Gas Limited
ON2176Enbridge Gas Distribution Inc.
ON2187Markham District Energy Incorporated
ON2189Imperial Oil
ON2190Plains Midstream Canada ULC
ON2203Greenergy Fuels Canada Inc.
ON2210Ivaco Rolling Mills 2004 L.P.
ON2220TransCanada PipeLines Limited
ON2224Irving Oil Commercial G.P.
ON2240Greater Toronto Airports Authority
ON2253Federated Co-operatives Limited
ON2254Great Lakes Copper Ltd
ON2258ADM Agri-Industries Company
ON2287Veresen Energy Infrastructure Inc.
ON2294P38 Energy Inc.
ON2299The Corporation of the City of Kingston
ON2301University of Guelph
ON2304Ontario Power Generation Inc.
ON2315Husky Oil Operations Limited
ON2325Gibson Gas Liquids Partnership
ON2329Natural Resource Gas Limited
ON2345Pembina Infrastructure and Logistics LP
ON2348Primemax Energy Inc.
ON2356Koch Supply & Trading, LP
ON2359The International Group Inc.
ON2361Hiram Walker & Sons Ltd.
ON2369Apotex Inc.
ON2370Labatt Brewing Company Ltd
ON2388Greenfield Energy Centre LP
ON2393BP Canada Energy Group ULC
ON2402Factor Gas Liquids Inc.
ON2414Elbow River Marketing Ltd
ON2439MacEwen Petroleum Inc.
ON2442TransAlta Energy Marketing Corp.
ON2445Royal Bank of Canada
ON2452Propane Levac Propane Inc.
ON2457McDougall Energy Inc.
ON2458Énergie Valero Inc. / Valero Energy Inc.
ON2470Grant’s Transport Limited
ON2475Shell Energy North America (Canada) Inc.
ON2481Skyjack Inc.
ON2504Larry Penner Enterprises Inc.
ON25111435925 ONTARIO LIMITED

Explanatory Notes: Qualified Bid Summary Statistics

Current Auction of 2017 Vintage Allowances

TermDefinition
Total Allowances Available for SaleTotal allowances available, by vintage, for purchase in the Current Auction in metric tons, sold by the Province of Ontario
Total Allowances Sold at AuctionTotal allowances, by vintage, purchased in the Current Auction
Total Qualified Bids Divided by Total Allowances Available for SaleTotal number of allowances included in all the qualified bids for the Current Auction allowances (regardless of bid price) divided by the total number of Current Auction allowances available in the auction
Proportion of Allowances Purchased by Capped Participants

The total number of Current Auction allowances (by vintage) purchased in the Current Auction by Capped Participants divided by the total number of Current Auction allowances sold in the Current Auction

Capped Participant is as defined in the Ontario Cap and Trade Regulation.

Herfindahl–Hirschman Index (HHI)The HHI is a measure of the concentration of allowances purchased by winning bidders relative to the total sale of Current Auction allowances in the auction. The percentage of allowances purchased by each winning bidder is squared and then summed across all winning bidders. The HHI can range up to 10,000, representing 100% of the current vintage allowances purchased by a single bidder (i.e.100 x 100 = 10,000)
Qualified Bid Price Summary StatisticsStatistics are calculated from all the qualified bids for the Current Auction allowances (regardless of bid price). All price statistics are shown in CAD.
Auction Reserve PriceThe minimum acceptable auction bid price for Current Auction allowances, in CAD
Settlement PriceThe Current Auction allowance price that resulted from the auction, in CAD
Maximum PriceHighest qualified bid
Minimum PriceLowest qualified bid
Mean PriceAverage qualified bid calculated as the sum of the bid price times the bid quantity of each qualified bid divided by the sum of the bid quantities across all qualified bids
Median PriceThe price per metric ton calculated so that 50% of the qualified bids fall above and below the median bid price
Median Allowance PriceThe price per metric ton calculated so that 50% of the quantity of allowances in the qualified bids fall above and below that price median value
Auction Exchange Rate (USD to CAD)The United States dollar to Canadian dollar (USD to CAD) daily average exchange rate as provided by the Bank of Canada for the day before, or a date that is before and as close as possible to, each Ontario auction. The Auction Exchange Rate is used in the determination of the Auction Reserve Price as described in the Detailed Auction Requirements and Instructions document.

Advance Auction of 2020 Vintage Allowances

The data for future vintage allowances available for sale at the Advance Auction are computed in the same manner as computed for the Current Auction.