Dec. 6 (Bloomberg) -- Quebec sold a third of the carbon- emission allowances offered in its first cap-and-trade auction this week and the permits cleared at the lowest possible price.
Bidders purchased 1.03 million of the 2.97 million 2013 permits auctioned Dec. 3, according to results released by the province today. They sold for the floor price of $10.75 per metric ton of carbon dioxide because of the low demand.
“It was a surprisingly under-subscribed auction,” William Nelson, an analyst at Bloomberg New Energy Finance, said. “Quebec has done a pretty poor job of signaling the start of their cap-and-trade scheme.”
Quebec’s program will be integrated with the larger California cap-and-trade market next year, when emitters from both jurisdictions will be able to buy common carbon credits.
At California’s last auction on Nov. 19, the state sold 16.6 million tons of carbon allowances for a price of $11.48 each.
The province said it sold a combined C$29 million (US$27.2 million) in 2013 and 2016 allowances in the auction. The Quebec environment ministry said the first sale was a success.
“The market works, and it works well,” Yves-François Blanchet, Quebec’s minister of sustainable development, environment, wildlife and parks, said in a statement. “We are very satisfied with the results of this first auction and confident that the remaining units will be sold at the upcoming auctions.”
Quebec plans to sell the remaining 2013 carbon allowances in future auctions, which will be held every quarter starting March 4. Carbon dioxide emitters will have until Nov. 1, 2015, to buy and submit carbon allowances for emissions created during 2013 and 2014, Genevieve Lebel, an environment ministry spokeswoman. said in an e-mail.
Nelson said that the province’s failure to sell all the allowances in the first auction was a “one-time freak result,” and that future auctions may fare better.
“Those guys who didn’t buy this week, but still need to cover their emissions for the next two years, will eventually have to show up to these auctions,” he said.
--With assistance from Lynn Doan in San Francisco. Editors: Dan Stets, Bill Banker