This Week’s Highlights

1. RGA prices reached a high $18.73 after Auction #63.
2. RGA Trade volumes rise as market anticipates tighter cap for RGGI program soon.
3. Vermont House passes bill to mandate 100% electricity generation from renewable sources by 2035.
4. British national Grid to invest $1B in New York grid infrastructure.

cCarbon’s Market View This Week

As cCarbon had pointed to earlier this week, RGA prices began a steep upward journey, in the aftermath of the 63^rd RGGI auction and the subsequent exhaustion of the CCR for 2024. With no other mechanisms to slow RGA prices, front prices rose 10.75% over the last week. This indicates a potential move to a much tighter market in the future, as market await the release of the Third Program Review.

In a step towards decarbonization, the Vermont House of Representatives passed a bill mandating 100% of the state’s electricity to come from renewable sources by 2035, making it only the second state after California to officially set the goal. The bill will now go to the Senate for approval. The Mid-Atlantic’s renewable energy infrastructure received another boost on Wednesday as the U.S. unit of the private firm British National Grid approved an investment of $4B to ease the integration of renewable energy generated into New York’s electricity grid.

The Grid Deployment Office of the U.S. Government on Thursday published the Action Plan for Offshore Wind Transmission Development in the U.S. Atlantic Region, which will help New York and Vermont achieve their objectives.

cCarbon is also keeping a close eye on the status of the PACER Act in Pennsylvania, which will create a state-wide cap and invest program.

Price and Volume Trends

There was a steep rise in both V24 front and benchmark RGA prices by 10.75% and 10.46% to $18.55 and $19.33, respectively. Traded volumes also experienced a significant increase by 21.06% to 21.07 M sh. tons (short tons) over the last week and was higher than the 4-week average volume trade by 69.72%.

Figure 1. RGGI ICE Daily Price Change, Data Source: Intercontinental Exchange

Table 1. RGGI Future Price Change (Weekly), Data Source: Intercontinental Exchange

Figure 2. RGGI ICE Weekly Volume Change, Data Source: Intercontinental Exchange

Trader Positions

An analysis of traders’ positions from the CFTC data gives us an indication of the market sentiment. The OI decreased by 0.03 M sh. tons over the previous week. Compliance entities decreased net long positions by 0.05 M sh. tons.

In the latest CFTC data reported on March 12^th2024, Open Interest (OI) decreased by 0.03 M sh. Tons over the previous week. Compliance entities decreased their net long positions by 0.03 M sh. tons, while managed money decreased net long positions by 0.14 M sh. tons.

Total Positions (Positions on March 12, 2024)

Figure 3. CFTC Positions Across Traders (WoW), Data Source: CFTC

Other Market Fundamentals

• The U.S. Bureau of Labor Statistics data shows that the consumer price index (CPI) increased 0.4% in February with gasoline and shelter price indices contributing to over 60% of the monthly increase.
• Natural gas futures climbed up marginally by 2.18% to $1.69 over the past week, as on March 21^st, Thursday.
• The Nasdaq Composite Index rose by 2.48% over the past week to 16369.41, as on March 20^th, Wednesday.

CC.Info Readers Digest

• Outlook for Voluntary Renewable Energy and Unbundled Voluntary Certificates in the USA | Insight Report | February 2024
• NYCI Set to Launch in 2025 as US’s Second-Largest Cap-and-Invest Initiative: A Conservative, Pragmatic Approach to Carbon Markets

Analyst Contact

• Rajas Raje (rpraje@ckinetics.com)
• Craig Rocha (cmrocha@ckinetics.com)