Washington state has fully sold out its containment reserve allowances. The auction offered 129,262 allowances at a price of $65.26 per tonne of CO2 equivalent, seeing significant demand with bids totaling nearly eight times the available supply. This high level of oversubscription highlights the tight supply in the Washington carbon market. It comes as the state moves toward a potential linkage deal with California and Quebec to improve market liquidity and reduce compliance friction by 2027.
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Demand is clearly outstripping supply here. The 7.8x oversubscription shows that the containment reserve is doing its job to stabilize prices, but it also proves that the market is starving for liquidity.
Exactly. If they keep selling out reserves like this, the push for linkage with California and Quebec becomes a necessity rather than just a policy goal. They need more volume to stop these spikes.
The price is $65.26, but I wonder how much of this demand is actually from emitters hedging against future gaps and how much is just speculative trading. Does anyone know the actual compliance shortfall for the current period?
