Nova Scotia holds first cap-and-trade auction

On 10 June 2020, Nova Scotia held its first auction under its cap-and-trade system, selling all allowances on offer.

The province’s environment ministry offered 640,000 allowances at a floor price of CAD 20 per ton (USD 14.78). Fifteen out of 26 regulated entities qualified for the June 2020 auction, which settled 20% above the floor price at CAD 24 (USD 17.74) with bidding volume of about one million allowances. Regulated entities qualify for the auctions by meeting certain requirements, such as registering in the Compliance Instrument Tracking System Service (CITSS) and submitting a financial guarantee. Opt-in emitters or speculators are not allowed to participate in auctions.

Nova Scotia’s cap-and-trade system began operating in 2019, covering industry, electricity, transport, and buildings. All sectors receive at least a portion of their allowances for free, with the cap-and-trade program initially starting in April 2019 (see ICAP’s Nova Scotia factsheet). Regulated entities will continue to receive the biggest portion of their allowances through free allocation.

The province holds two to four auctions per calendar year (starting in 2020 with two auctions). The second 2020 auction is scheduled for 2 December. The auction’s floor price increases by 5% plus inflation each year.