5 Colo. Code Regs. § 1001-31-D-IV

Current through Register Vol. 47, No. 24, December 25, 2024

Section 5 CCR 1001-31-D-IV - Annual GHG Credit Auctioning

IV.A. On June 30, 2025 and each June 30 or first business day thereafter, the auction administrator will administer a voluntary GHG credit auction. Only manufacturing stationary sources may participate in any GHG credit auction to buy or sell GHG credits.

IV.A.1. The auction administrator shall create a publicly available website for publishing information related to the annual auction. The website shall contain the following information:

IV.A.1.a. General guidance on the process, including how bids and offers are used to determine the auction settlement price and the total quantity of GHG credits sold at auction.

IV.B. Beginning the third Tuesday of May 2025 and each third Tuesday of May thereafter, the auction administrator shall publish a notice of auction on its website, with the following information:

IV.B.1. Auction application requirements and instructions;

IV.B.2. The form and manner for submitting bids;

IV.B.3. The procedures for conducting the auction; and

IV.B.4. The time, date, and procedures for a second round of the auction, if necessary, pursuant to Section IV.I.

IV.C. By May 31, 2025 and every May 31 thereafter, any manufacturing stationary source that desires to participate in the auction, for each vintage year of GHG credits, as a bidder or offeror must inform the auction administrator in writing in order to participate and submit bids or offers, respectively, in the auction. Failure to provide such notice for a vintage year of GHG credits precludes the manufacturing stationary source from participating in that year's annual auction process for the respective vintage year.

IV.C.1. A manufacturing stationary source that offers to sell GHG credits in one or more vintage years in any auction is not eligible to bid to purchase GHG credits from the same vintage years in the same auction, but is eligible to bid on GHG credits from vintage years different than those offered for sale.

IV.C.2. A manufacturing stationary source that bids to buy GHG credits in one or more vintage years in any auction is not eligible to offer to sell GHG credits from the same vintage years in the same auction, but is eligible to offer GHG credits for sale from vintage years different than those bid for purchase.

IV.D. Three (3) business days after receiving notices of intent to participate, the auction administrator will determine whether a sufficient number of bidders and offerors have given notice of their intent to participate in the annual auction. A sufficient number requires more than zero offerors and more than zero bidders. If there is a sufficient number of bidders and offerors, then the auction administrator will publish a notice stating that the auction will take place that year and will provide the number of bidders and offerors that have provided a notice of intent to participate. If there is not a sufficient number of bidders and offerors, then the auction administrator will publish a notice on its website canceling the auction for that year, and the timeline in the remaining sections of this Part D shall not apply.

IV.E. Auction window. Five (5) business days after May 31 of the relevant year, the auction administrator will accept bids and offers from bidders and offerors, respectively, for each vintage year of GHG credits through the website managed by the auction administrator, and the auction administrator shall allow bids and offers to be submitted by no later than June 15 of the relevant year.

IV.E.1. The auction bidding window may be delayed, rescheduled, or canceled due to technical systems failures.

IV.E.1.a. The bidding and offering window may be rescheduled by the auction administrator due to technical system failures. If technical systems failures cannot be resolved and a bidding window cannot be rescheduled to meet the requirements of this section, then the auction administrator will cancel the auction bidding window.

IV.F. All bids for GHG credits will be considered a binding commitment for the purchase of GHG credits under the rules of the auction. All offers for GHG credits submitted for sale in the auction will be considered a binding commitment for the sale of GHG credits under the rules of the auction, and by offering GHG credits for sale, potential sellers warrant and represent that the credits generated are based on an accurate reporting of GHG emissions for the relevant year.

IV.G. Auction Format

IV.G.1. A separate auction will be held for each vintage year of GHG credits, and each auction will consist of a single round of bids and offers for GHG credits of the applicable vintage year.

IV.G.2. Each individual manufacturing stationary source may only act as a bidder or offeror of GHG credits for an individual vintage year in the annual auction, consistent with Section IV.C.

IV.G.3. Bidders submit bids and offerors submit offers.

IV.G.4. Each bidder may submit multiple bids for each vintage year of GHG credits.

IV.G.5. Each offeror may submit multiple offers for each vintage year of GHG credits.

IV.G.6. Bids and offers will be sealed and given confidential treatment.

IV.G.7. Bids and offers must specify the quantity of GHG credits to be transacted and must be submitted as multiples of ten (10) GHG credits.

IV.G.8. Bids and offers must be submitted in U.S. dollars and whole cents, on a per-GHG credit basis.

IV.G.9. Bids and offers must specify the vintage year of the GHG credits for which they are made.

IV.H. Determination of Winning Bidders and Settlement Price. For each auction of each vintage year of GHG credits, the following process shall be used to determine a single auction settlement price, allocations of GHG credits sold to bidders, and proceeds from such sales to offerors:

IV.H.1. Each bid will consist of a price and the quantity of GHG credits of the applicable vintage year, in multiples of ten (10) GHG credits, desired at that price.

IV.H.2. Each offer will consist of a price and the quantity of GHG credits of the applicable vintage year, in multiples of ten (10) GHG credits, available for sale at that price.

IV.H.3. Each bidder may submit multiple bids for each vintage year of GHG credits.

IV.H.4. Each offeror may submit multiple offers for each vintage year of GHG credits.

IV.H.5. Beginning with the highest bid price, bids from each bidder will be considered in declining order by price.

IV.H.6. Beginning with the lowest offer price, offers from each offeror will be considered in ascending order by price.

IV.H.7. The auction administrator will develop a Division-approved protocol for determining which GHG credits are exchanged and at what price through the auction, which will be every GHG credit for which a bid price exceeds or is equal to an offer price associated with the GHG credit considered in the order prescribed in Sections IV.H.5 and IV.H.6 offered into the auction.

IV.H.7.a. The protocol, through the single auction settlement price, must ensure that no bidder pays more per GHG credit than the bidder bid for a particular GHG credit, and no offeror receives less per GHG credit than the offeror offered for a particular GHG credit.

IV.H.7.b. The protocol will also provide a method for resolving tie bids and offers in a reasonable and equitable manner. The protocol shall also address, in a reasonable and equitable manner, circumstances where the lowest bid price exceeds the offer price at that quantity of total credit sales.

IV.H.7.c. Under the protocol, the auction administrator will determine the auction settlement price, and it will determine from which winning offeror(s) a winning buyer will purchase GHG credits.

IV.I. Additional auction. If, in the first round of the auction for any vintage year's auction pursuant to Sections IV.G and IV.H, the total GHG credits sold through the auction is less than 50% of the total GHG credits contained cumulatively in all the offers submitted to the auction for the applicable vintage year, then there will be an additional auction round for any such vintage year of remaining GHG credits not sold in the first auction round.

IV.I.1. Within five (5) business days after the first auction, the auction administrator shall publish the auction settlement price from the first round of the auction for any vintage year, the highest and lowest bid price, and the highest and lowest offer price, the total number of GHG credits offered, and the median of all bid prices and offer prices, from the initial auction round.

IV.I.2. There shall only be one additional auction round. Bids and offers for the additional auction shall be received by the auction administrator no later than three (3) business days after the publication of the results of the first auction pursuant to Section IV.I.1, and the additional auction shall be held within five (5) business days after publication of the results of the first auction pursuant to Section IV.I.1.

IV.J. Actions following auction.

IV.J.1. Within two (2) business days following an auction or any additional auction round held pursuant to Section IV.I, the auction administrator will notify, by vintage year:

IV.J.1.a. Each winning bidder of the auction settlement price, the number of GHG credits that the bidder purchased, the bidder's total purchase cost, and to which sellers of GHG credits to direct payment.

IV.J.1.b. Each winning offeror of the auction settlement price, the number of GHG credits that the offeror sold, the offeror's total sales revenue, and from which bidders to expect payment.

IV.J.2. Within fifteen (15) business days following an auction or any additional auction round held pursuant to Section IV.I, the auction administrator will publish the following information:

IV.J.2.a. The identity of the manufacturing stationary sources that were bidders, but shall not publish the bids made by such entity nor the total quantity of GHG credits purchased by such entity;

IV.J.2.b. The identity of the manufacturing stationary sources that were offerors, but shall not publish the offers made by such entity nor the total quantity of GHG credits sold by such entity;

IV.J.2.c. The Auction settlement price; and

IV.J.2.d. Aggregated or distributional information on bids, offers, and GHG credit purchases.

IV.J.3. To transfer the GHG credits sold at auction from the respective seller's credit account to the respective buyer's credit account, the seller and buyer shall provide notice to the Division requesting the GHG credits be transferred.

5 CCR 1001-31-D-IV

46 CR 21, November 10, 2023, effective 12/15/2023