Current-vintage allowances cleared at their highest price since November 2024, as market attention turned to California’s pending regulatory update and its expected September 1 effective date. Quebec’s final regulations have hit the Gazette as of August 26; in advance of fall elections.
The August 19, 2026 Western Climate Initiative (WCI) auction results were released August 26. The auction took place against a backdrop of firming pricing, tied to the expectation of regulatory certainty coming by September 1 on the final California regulatory package introduced in April, adopted by the Board in May, and sent to the Office of Administrative Law (OAL) in July for a 30 working day review.
The new California regulations extend the program through 2045 set out a tighter cap trajectory starting in 2027, with offsets moving “under the cap.” They also ensure high free allowance allocations through 2030 and introduce a new but controversial Manufacturing Decarbonization Incentive (MDI). An early effective allows for the rule to apply in time for 2027 free allowance allocations in October 2026.
Meanwhile, Quebec quietly published its final rule on August 26 (O.C. 1252-2026, Gazette officielle du Québec) to take force September 10. The final rule is nearly identical to May’s proposal and has been incorporated into ClearBlue’s modeling. The existing cap trajectory is maintained through 2030, while the offsets usage limit is reduced, with quotas imposed for Quebec-issued offsets.
Following the news from Quebec, all eyes are on California and the September 1 effective date target. Otherwise, with the program reviews for California and Quebec finally settling, attention will turn to fall 2026 elections in Quebec and for California’s Governor along with clarity on the timeline for linkage of Washington’s Cap-and-Invest with WCI, expected at some point in 2027, perhaps in time for the large Washington Compliance Period 1 allowance surrender in November 2027.
The August Auction
Auction results confirm full subscription, with a clearing price of USD 32.48 for current-vintage allowances, up 12.7% from May's USD 28.81, and the strongest clearing price since the November 2024 auction settled at USD 31.91. Pricing contrasts with auctions in 2025, where the February 2025 auction cleared right at that period's USD 27.94 floor with a soft 1.04 cover ratio, and the May 2025 auction went undersold. There was a significantly increased share of allowances won by entities without compliance obligations, as the compliance share was just 77.8% compared to 81.3% in May. The current vintage auction price was similar to the prevailing secondary market allowance price the day of the auction.
Current Vintage Auction Statistics
|
USD 32.48 Settlement price |
1.31x Cover ratio |
+USD 4.54 Above 2026 floor ($27.94) |
77.8% Compliance entity share |
The future-vintage (advance) auction for V-29s settled at USD 32.75, a slight USD 0.27 premium to the current vintage, on a stronger 1.86 cover ratio, versus 1.37 in May. Compliance entities took 78.8% of the future-vintage volume, the highest share of the last several auctions.
The August Auction in Context
- Nov 2024: $31.91, cover ratio 1.50, fully sold.
- Feb 2025: $29.27, cover ratio 1.74, fully sold.
- May 2025: $25.87 (at floor), cover ratio 0.86, undersold — 7.5M allowances went unsold across CA/QC.
- Aug 2025: $28.76, cover ratio 1.45, fully sold.
- Nov 2025: $28.32, cover ratio 1.10, fully sold.
- Feb 2026: $27.94 (at floor), cover ratio 1.04, fully sold.
- May 2026: $28.81, cover ratio 1.11, fully sold.
- Aug 2026: $32.48, cover ratio 1.31, fully sold.
The latest auction breaks above the pattern that had prevailed through 2025 and early 2026, with pricing hovering just above the price floor and is the highest result since November 2024.
Policy update: CARB's Cap-and-Invest rulemaking moves back to OAL
Increased lift from the floor depends on regulatory clarity for the WCI jurisdictions of California and Quebec, plus linkage with Washington, expected in 2027. With Quebec over the finish line, market players are eager to get confirmation of the effective date for the California regulatory package approved in May. CARB's Final Statement of Reasons (FSOR) for the amended Cap-and-Invest regulation was originally submitted to the Office of Administrative Law (OAL) on July 14, 2026, with OAL's decision due by August 25. On August 20, CARB withdrew that submission and refiled it as a new "Regular Resubmittal," a procedural move not to be confused with an OAL disapproval. The news resulted in market volatility.
ClearBlue Markets confirmed the reasoning in an August 21, 2026 Live Update to clients. CARB refiled to align the Cap-and-Invest package's review timeline with its related Mandatory Reporting of GHG Emissions regulation, which OAL had received separately on July 31 and found to be interrelated.
ClearBlue received the following message from OAL:
“CARB submitted the California Cap on GHG Emissions regulations to OAL on July 14,
2026 (OAL Matter No. 2026-0714-01S). During the course of OAL’s review, it became
apparent that the California Cap on GHG Emissions regulations were interrelated with the
Mandatory Reporting of GHG Emissions regulations submitted to OAL on July 31, 2026
(OAL Matter No. 2026-0731-01S). On August 20, 2026, CARB completed a procedural step
and withdrew OAL Matter No. 2026-0714-01S from OAL review pursuant to Government
Code section 11349.3(c). CARB resubmitted the action on August 20, 2026 (OAL Matter No.
2026-0820-02SR), to more closely align OAL’s review period with OAL Matter No. 2026-
0731-01. CARB has requested a September 1, 2026, effective date for OAL Matter No. 2026-
0820-02 and OAL plans to complete its review of both matters on or before this date.”
Therefore, the two packages are both now being reviewed together, and the while the resubmittal extended the review period for the Cap-and-Invest, a September 1, 2026 effective date is still in play. ClearBlue expects the program amendments to be implemented for 2027, with California’s free allowance allocations in October 2026.
Rulemaking concludes: Quebec publishes final regulations
The final regulations from Quebec were published August 26 to take force September 10. The 45-day consultation that closed July 3 produced essentially no substantive changes. The move provides regulatory stability and removes doubt over the ability of the regulatory process to close out prior to the October elections.
The table below summarizes the new provisions vs. the existing regulations.
As expected from the May proposal, the regulation leaves the underlying annual emissions cap trajectory untouched, which remains set through 2030. Recall there was discussion in the workshops of removing allowances from the system prior to 2030, but this was not formally proposed. Free allocations also run through 2030, similar to California, leaving this discussion for a future rulemaking. As proposed, the final package reduces the offset credit limit from 8% to 6% of covered emissions starting in the 2027 compliance period. There is also a Quebec “DEBS” requirement, whereby a cap is imposed on offsets not issued by Quebec. The limit for non-Quebec offsets is five-sixths of the total offsets usage limit in 2027 and two-thirds from 2029. Compliance periods are restructured from three-year blocks into a two-year period (2027–28) followed by alternating three- and two-year cycles from 2031.
Recent WCI Reports from ClearBlue Markets
- Live Update – Quebec Quietly Finalizes its Cap-and-Trade Program Review (Aug. 29, 2026)
- Live Update – FSOR Resubmitted to OAL (Aug. 21, 2026)
- WCI Supply & Demand Outlook – August 2026 (Aug. 11, 2026)
- Canada Monthly Report – July 2026 (Jul. 31, 2026)
- NA Fundamentals Weekly (Jul. 20, 2026)
- NA Technicals Weekly (Jul. 20, 2026)
- Canada Monthly Report – June 2026 (Jun. 30, 2026)
- WCI Offset Biweekly (Jun. 24, 2026)
- MELCC – Market Notice on Signing Linkage Agreement between Quebec, California, and Washington State (Jun. 23, 2026)
- California and Quebec Announce Plans to Sign Linkage Agreement with Washington (Jun. 23, 2026)
- WCI Offset Supply & Demand – June 2026 (Jun. 22, 2026)
- Live Update – Board Votes 10-3 to Adopt California Cap-and-Invest Regulations (May 29, 2026)
- WCI Auction #47 Result (May 27, 2026)
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