Positive Environment News

EU To Auction 120 Million CO2 Permits In 2012

Date: 16-Mar-11
Country: BRITAIN
Author: Nina Chestney

The European Commission has proposed that 120 million Phase 3 EU carbon permits will be auctioned early in 2012 and hopes member states will agree on the plan by the summer, it said on Tuesday.

Under the EU's Emissions Trading Scheme (EU ETS), the emissions of some 11,000 factories and power plants are capped and a corresponding number of permits, called EU Allowances (EUAs), are distributed to them.

If they emit more carbon dioxide than their allocation of permits, they have to buy more to cover higher emissions.

In the third phase of the scheme, which runs from 2013 to 2020, most EUAs will be allocated through auctions rather than being distributed to emitters for free.

Many emitters have been lobbying for auctions to begin well before 2013 so they can hedge forward power sales in advance but squabbles in the bloc over the auctioning mechanism made a date before 2012 seem unlikely.

The Commission's proposal on Tuesday will be added to its auctioning regulation which has been submitted to member states for approval.

There is broad consensus on the supply and demand factors being considered but some uncertainties still exist which need to be narrowed down over time, said Jos Delbecke, the EU Commission's director-general for climate action, in a statement.

"Stakeholders have expressed a strong preference to have the early auction volume fixed now as this gives market actors time to adapt to the chosen level," he added.

A speedy decision on the amount of EUAs to be auctioned is important so that auction platforms can be prepared.

The EU Commission has said around 60 percent of the nearly 1 billion EUAs to be auctioned annually from 2012 will enter the market via a common platform.

However, Poland, Germany and Britain have opted out of the centralized platform in favor of their own national arrangements.

"We will therefore take the discussions with Member States forward swiftly and aim at an agreement in the Climate Change Committee before the summer," Delbecke said.

The 120 million EUAs to be auctioned in 2012 will be in addition to 300 million EUAs which the European Investment Bank intends to monetize by the end of 2012 to raise low-carbon technology funds.

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