California Carbon Allowance (CCA) prices dropped this week in line with macroeconomic weakness, trading down over 6%. Dec22 closed the week at $30.86/allowance. The spot market (June) is now trading below the last auction settlement price of $30.85. Dec22 reached a five-month high of $33.28 at the beginning of June before selling off, alongside broader bearish sentiment. Following Wednesday’s rake hike, the one year (Dec22-Dec23) spread in CCAs expanded to 6.7%, up from 6% the prior week. Implied volatility is trading in the low to mid-30% range, down from around 40% at the end of May. California announced they will offer just under 57mm allowances for the next quarterly auction, held on August 17, down 2.2% from the last auction held in May.

  View full newsletter