North America’s largest greenhouse gas (GHG) emissions allowance sale, which California conducts with Quebec, struggled to sell credits in the May auction, according to initial results.

In total, there were 57.5 million current vintage (2020) credits offered and 21.1 million sold for a settlement price of $16.68/credit. Another 8.6 million advance vintage (2023) credits were offered and 1.7 million sold at $16.68/credit collectively by the California Air Resources Board (CARB) and Quebec’s Ministry of Sustainable Development, Environment and Fight Against Climate Change.

A third-party market monitor cleared the credit totals last month, but the proceeds won’t be available until mid-June.

CARB spokesperson David Clegern said a “number of quarterly auctions” has been undersubscribed for greenhouse gas (GHG) emissions credits, including “five in a row between 2016 and 2017.”

He said he suspected that the “unexpected, large drop” in GHG emissions “has had an impact on demand.” Since the Covid-19 lockdowns around the world began in March, GHG emissions have declined.

CARB offered 26.8 million current vintage allowances, while the state’s investor-owned utilities (IOU) offered 21.5 million, and Quebec offered 9.06 million. The IOUs sold 17.8 million and Quebec sold 3.3 million. For advance vintage, CARB offered 7.3 million and sold 1.4 million. Quebec sold 268,295 vintage 2023 allowances.

Clegern said the IOUs are given a 100% allocation of allowances that they must offer at each auction with all the proceeds going to ratepayers. “They must then purchase allowances to cover their emissions as the free allocation is for ratepayer benefit only. The ratepayer allowances are sold first, ahead of Quebec and CARB allowances.”

California lawmakers in 2017 extended the cap-and-trade program for another decade. The state’s cap-and-trade program was created to require electric generation plants, major industrial operators and refineries to limit GHG emissions while allowing emissions credits to be traded as the limits are gradually tightened.