Quebec and California will hold an eleventh joint cap-and-trade emissions units auction on May 16, 2017 (Press Release, March 17, 2017)
Frequently asked questions
Under the C&T system, a maximum of four auctions of GHG emission units could be held annually. However, there is no pre-set date for the auctions. A notice will be published at least 60 days prior the date of an auction. The notice will outline the rules and conditions pertaining to the sale.
At auction, a bidder may submit more than one bid insofar as each one complies with the minimum price, the amount covered by the bidder’s financial guarantee, the bidder’s purchasing limit and holding limit. The bid price refers to the price offered for one emission unit and must be in USD or CAD in whole dollars and cents. The number of bids refers to the number of lots (1 lot = 1 000 emission units) requested at this price. All offers remain confidential, and the selling price is determined by the offer that allows for selling the last GHG emission unit available. Winners will then be notified of the number and total cost of emission units the entity has been awarded. Winners must complete financial settlement within the prescribed time period, failing which their financial guarantee will be used.
Minimum selling price for a GHG emission unit at auction
For 2012, the minimum price for a GHG emissions unit at auction was $10. This minimum price is increased annually thereafter by 5% plus inflation. There is no maximum price.
For joint auctions, in December of each year each jurisdiction provides the annual minimum selling price for the following year. The actual minimum selling price in effect for each joint auction is determined the day prior to a joint auction. The actual minimum selling price is the higher of the California or Québec Annual Reserve Prices after applying the established Auction Exchange Rate. The Auction Exchange Rate in effect for a joint auction will be set the business day prior to the joint auction as the most recently available noon daily buying rate for USD and CAD as published by the Bank of Canada.
Registering for auctions
To take part in the auctions, an emitter or participant must open an account with the GHG emissions allowance Compliance Instrument Tracking System Service (CITSS). However, auction participation is not automatic. Once the account has been opened, the emitter’s or participant’s account representatives, or participants acting on their own behalf as account representatives, must check the “Auction Participation” box under the “Auction” tab in the CITSS system. This box must be checked prior to each auction in which an emitter or participant wishes to take part. Once selected, the box will remain enabled until an account representative disables it. Account representatives of emitters or participants having indicated their intention to participate in the next auction will receive an email from the Auction Administrator with a link that will enable them to register as users on the auction platform.
The Auction Administrator
Under the Regulation respecting the delegation of management of certain parts of a cap-and-trade system for greenhouse gas emission allowances, some support services for the implementation of the C&T system, including the administration of auctions, have been delegated to the Western Climate Initiative, Inc., a non-profit organization. This organization has signed a contract with Markit, whose primary mandate will be to provide the auction platform as well as technical assistance to participating governments, currently Québec and California.
The Financial Services Administrator
Western Climate Initiative, Inc. has signed a contract with Deutsche Bank, which will provide the financial and transactional services offered in conjunction with the auctions to the participating governments, i.e., Québec and California at this time.
The Financial Services Administrator provides the following services: