Several other factors may have influenced last month’s lacklustre Ontario carbon allowance auction result besides heightened political uncertainty, several market participants say.
Ontario’s quarterly sale, the final of the year, was under-subscribed for the first time, with buyers picking up 20.9 million of the total 25.3 million current allowances on offer at the reserve price of C$17.38.
Meanwhile, analysts at ClearBlue Markets pointed to the illogicality of the ‘political uncertainty’ argument in relation to the fact that the Nov. 29 future auction for 3.1 million vintage-2020 allowances sold out at C$18.89 – an 8.7% premium to the floor. The sale also recorded a 1.45 bid-to-cover ratio, compared to the current auction’s 0.83.
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