1. Total Weekly Volume of 6.41 M tons, +81.07% WoW change
2. RGGI ICE weekly average settlement price: $14.03, +0.22% WoW.
3. Managed Money increased net-short positions by 0.55 M tons, compliance entities increased net-long by 4.9 M tons.

Quick Summary:

In its ruling, the US Supreme court said, ‘a cap on power plants’ carbon dioxide emissions that forces a transition to other fuels may be a “sensible” solution to the climate crisis but, Congress did not give the Environmental Protection Agency the broad authority to make such requirements’ (Texas Tribune). Going forward, all federal carbon programs that regulate emissions would need to be passed through Congress. The states may continue to regulate emissions through legislation.  it will not have any impact on the WCI and RGGI carbon markets.

Before the ruling, compliance entities and managed money, reduced positions as there was fear that the ruling would have a negative impact on the cap-and-trade programs. The market rebounded quickly after the ruling, as deeper analysis of the verdict showed no fundamental impact on the RGGI.  

RGGI price strengthen with front price trading above the 2022 CCR price

Weekly RGGI Volumes increase (+81.07% WoW)

Market Fundamentals 

Trader Positions: 

Compliance entities increase net long positions and Managed Money increase net-short positions 

An analysis of traders’ positions from CFTC data gives us an indication of market sentiments. Open interest increased by 7 M tons, compliance entities net long increased by 4.9 M tons and managed money net-short increased by 5.59 M tons.

WoW Change in Positions 

Compliance Entities (Net Long: 4.9 M tons ):

Increased long positions by 0.015 M tons 

Decreased short positions by 4.9 M tons.

Managed Money (Net Short:0.55 M tons ):

Decreased long positions by 0.86 M tons 

 Decreased short positions by 0.31 M tons.

The RGGI rebounded quickly post the Supreme Court ruling on Thursday, with the RGGI front allowances now trading on the ICE exchange at prices above the CCR trigger price. The allowances have little room to move higher, having already surpassed the Cost Containment trigger price. Compliance entities reduced their short positions by 4.9 tons, and managed money reduced their long positions by 0.55 M tons. This reduction in open position was before the verdict, with the expectation that  traders would initiate new positions soon after.

Analyst: Craig Rocha (cmrocha@californiacarbon.info)