Washington Carbon Allowance (WCA) Q1 2025 Auction Results

• Cleared at $50.00, which was higher than most expected
• Dec25 futures started the day at $52.70 prior to the release and pushed higher to $54.84 (~$3 increase on the day)
• Bid-to-cover ratio was 2.29 (Total Dollar Amount of Bids Received/Total Dollar Amount of Bids Accepted), indicating high demand. It was also the highest since the first WCA auction held in 2023
• Compliance entities purchased ~82% of available WCAs, up almost 10% from the last auction
• 2025 Comeback: In 2024, the first three auctions cleared below $30 (near the 2024 floor) largely due to the potential repeal, though the last sale in December triggered an Allowance Price Containment Reserve (APCR) auction because of undersupply in the market, meaning additional allowances were offered

RGGI Q1 2025 Auction Results

• Settled at $19.76, the same settlement price of Mar25 RGAs the day prior and 1.5% below the previous quarter's auction clearing price
• The Cost Containment Reserve (CCR) was fully exhausted, which also occurred Q1 last year. The CCR releases 10% of that year's allowance cap if the auction clears above its trigger price ($17.03 in 2025) to help prevent price spikes.
• Bid-to-cover ratio was 3.70, signaling strong demand, with speculators taking 44% of the sale, the highest since the same period last year

The Future of Carbon in the Trump Era Webinar Highlights

On Thursday, KraneShares hosted a webinar titled The Future of Carbon in the Trump Era, featuring Clayton Munnings, former CARB Economist and CEO of Elevate Climate, Luke Oliver, KraneShares Managing Director and Head of Strategy, and Eron Bloomgarden, Partner at Climate Finance Partners (CLIFI). The discussion covered the impact of shifting federal policies on state cap-and-trade programs, the latest regulatory developments in California, the influence of peace talks and stabilizing natural gas prices on European carbon markets, and the timing of the cap-and-trade lifecycle.

A large part of the conversation focused on CCA policy timing. On Wednesday, the market regulator, CARB, updated a cap-and-trade section of its website to say the regulatory package is expected to be finalized by "this year" rather than the previous language of "earlier 2025." CARB also noted that they're "still working through the regulatory package and expect to move forward this year" and "at the same time, the Administration is working with the legislature as they consider the extension of the cap-and-trade program" beyond 2030.

CCA prices slipped lower following this update, though Clayton highlighted how further delays to this rulemaking process are disadvantageous to the state as it will likely lead to lower auction revenues and climate funding as well as impact the pace of emissions reductions. He noted that the mention of the legislature was unprecedented, though is optimistic as he thinks they probably want to avoid an adversarial extension of the program as we saw in 2017 and instead focus on collaborating, especially under the new federal administration. This could mean that the rulemaking comes out slower, but it shows CARB and the legislature are trying to avoid political issues, working in unison to update the program to hit emissions targets, extend the program, and address affordability concerns. To watch a replay of the webinar, click here.

EUAs Affected by Macroeconomic Pressures

EUA prices continue to trade below the key €70.00/tonne level as macroeconomic pressures appear to be building on both sides of the Atlantic, and speculative investors continue to reduce their overall length.f

December 2025 EUA futures closed on March 11 at €68.24, and are down 19% from the 2025 high of €84.50 set at the end of January. The principal contract set a new year-to-date low of €66.78 on March 7 before rallying all the way to €70.28 at the start of this week.

Renewed weakness and volatility in natural gas has been a key driver, as news headlines have become the dominant price mover. Front-month TTF futures (the benchmark for European nat gas) prices have fallen 23% from their highs of the year, as traders swing between optimism that a peace deal in Ukraine could bring a partial resumption in flows of Russian gas to Europe, and concerns that a continuing conflict will mean no fresh supply.

The latest weekly Commitment of Traders data showed investment funds reducing their net long position in TTF natural gas futures to 126 TWh in the week ending March 7 from 175 TWh the week before. At the same time, funds trimmed their net length in EUAs by 14%, to 36.4 Mt from 42.3 Mt a week earlier, bringing the reduction in net long positions over the last four weeks to 40%.

Market stakeholders have expressed some surprise at the degree to which this net length is “sticking” and shrugging off the widespread weakness in prices. More than a few have suggested that many speculative players are holding on to positions in anticipation of the end of the REPowerEU supply boost in the middle of 2026, which is commonly expected to lead to a sustained boost in prices. Yet, at the same time, a gradually worsening economic outlook in the US has started to depress equity markets on both sides of the Atlantic, with threats of tariffs on major trading partners dampening sentiment and encouraging investors to seek safe havens.

Asian demand for gas has also faded, and a lack of sustained demand for fresh LNG cargoes from Asia means that prices in the region have slipped lower, reducing the upward pressure on TTF markets to complete for US liquefied gas cargoes. The fall in gas prices has, however, brought the fuel back into profit as a fuel for prompt power generation, even as long-term despatch still favours coal-fired plants. This may help to stabilize gas in the near term, as coal prices have rallied slightly in the last two weeks.

Europe’s carbon market may be aided by what may be early signs of industrial resilience in the region. German industrial output beat expectations in January, posting a 2% increase, while Eurozone production is also forecast to have grown at the start of the year.

Carbon Market Roundup

The weighted global price of carbon is $51.83, up 0.8% from the week prior. EUAs trended up 3.4% for the week at €70.99. UKAs rallied 13.4% to £44.29. CCAs fell 9.3% to $29.90, largely on the news around CARB's latest timeline update. RGGI posted a 2.3% drop to $20.50, while WCA prices moved 2.6% higher at $54.20.