Page 20 - PPGA Propane Post Winter

Industry News
auctions reach the specified trigger price. A small number of APCR allowances will be retained until 2026 to ensure APCR allowance availability prior to the compliance events held in 2025 and 2026.
• All APCR allowances will be offered at the lower Tier 1 price, per WAC 173-446-370, unless and until Ecology completes a linkage agreement to connect Washington’s cap-and-invest program with the joint market for Califor- nia and Quebec’s carbon programs.
WHEN DOES AN APCR AUCTION OCCUR?
APCR auctions occur:
• When a quarterly auction settles above the Tier 1 price.
For 2023, that trigger price is $51.90,
• If the Emissions Containment Reserve — a separate pool
of allowances dedicated for new covered businesses en-
tering the market for the first time — is fully exhausted,
• Once prior to the 2024 compliance event, and prior to
each annual compliance event thereafter.
HOW MANY ALLOWANCES WILL BE OFFERED?
2026. Prior to the second APCR auction, conducted in Novem- ber 2023, Ecology announced that it would increase the number of allowances available, and make all of those allowances avail- able at the Tier 1 price.
Relative to the ‘partial frontloading’ method announced prior to the first APCR auction that spread APCR auction supply across the first compliance period (8 million allowances for 2023, 6 million in 2024, 3 million in 2025 and 1.7 million in 2026), this schedule provides an additional 1 million APCR allowances
in 2024. This shift will continue to provide cost containment through the APCR, although it will reduce the potential 2026 APCR auction supply from 1.7 million to 700,000 allowances.
The updated schedule is consistent with the approach taken in the November APCR auction: Ecology will offer allowances all at Tier 1, unless and until a linkage agreement is signed.
WHAT DO THESE CHANGES MEAN IF AN APCR AUCTION IS TRIGGERED BY THE 4TH QUARTERLY AUCTION? WHAT ABOUT APCR AUCTIONS IN 2024? Ecology will hold its fourth and final quarterly allowance auc- tion of 2023 on Dec. 6, 2023. If the settlement price reached is above the APCR trigger price, Ecology will hold the resulting APCR auction in February 2024 and make 1.9 million allowanc- es available. This represents the total potential 2023 APCR al- lowance supply (above), reduced by the number of allowances sold at prior APCR auctions held in 2023. All of the allowances would be available at $51.90, the 2023 Tier 1 price.
If an APCR auction is triggered by the settlement price of any one of the four quarterly allowance auctions held in 2024, the number of APCR allowances offered would be equal to the total number of APCR allowances offered in that year—including APCR allowances not sold in prior APCR auctions—divided by the number of potential APCR auctions remaining in the year. Unless and until a linkage agreement is signed, the full quantity of APCR allowances would continue to be offered at the Tier 1 price.
FOR MORE INFORMATION ABOUT THE APCR OR HOW TO APPLY TO PARTICIPATE IN AUCTIONS, VISIT ECOLOGY’S AUCTIONS AND MARKET AND TRAININGS AND RESOURCES PAGES.
The number of allowances offered at each auction is deter- mined based upon the number of allowances left in each year’s designated APCR budget according to the following annual schedule:
ACPR Annual Schedule
2023 2024 2025
8M 7M 3M
The number of allowances offered will be equal to the remain- er of the APCR budget for that year divided by the number of potential APCR auctions left in that year. If there are APCR allowances left over from the previous year, those will also be included in the budget.
All allowances will be offered at the Tier 1 price for that year, unless and until a linkage agreement has been signed.
WHAT HAS CHANGED?
Prior to the first APCR auction conducted in August 2023, Ecology announced that half of the allowances in each auction would be introduced at Tier 1, and half at Tier 2. Ecology also published a schedule of allowance supply from 2023 through
20 | PACIFIC PROPANE GAS ASSOCIATION
2026 ~700,000