Lack of Early CO2 Auctions 'Not an Option,' Traders Group Says
2010-12-13 16:00:59.344 GMT
By Ewa Krukowska
Dec. 13 (Bloomberg) -- The European Union must organize
early auctions of carbon allowances before the world's biggest
emission-trading system moves to the next phase in 2013, a
traders association said today.
The 27-nation EU, which gave away the majority of
allowances since it started its cap-and-trade program in 2005,
will require most emitters to purchase their allotment of
permits when the second trading period ends in 2012.
The EU is planning to provide emitters before 2013 with 300
million phase-three allowances from a European Investment Bank
reserve to spur clean-energy projects. The bloc also may decide
to hold early auctions of permits for the next phase, a needed
step, the International Emissions Trading Association said.
"Zero-auction is not an option," Simone Ruiz, European
policy director at IETA, told a stakeholder meeting organized by
the EU regulator today in Brussels.
The bloc will auction about 60 percent of all CO2 permits
in 2013, according to estimates by the European Commission. That
proportion will increase in coming years.
The cap for carbon-dioxide discharges for that year has
been set at 2.04 billion tons, including aluminum and chemical
makers joining the program in the third phase. This would be
worth around 30 billion euros ($40 billion) at today's prices. A
further adjustment is planned for airlines, which will become
part of the system in 2012.
"We will move from a situation where we have about 4
percent of all allowances being auctioned on the market by
member states to a centralized system with more than 50 percent
of allowances being auctioned, and the markets need to know that
the commission and member states are capable of doing this,"
The volume deemed necessary by analysts and power companies
to ensure "a smooth transition" to the third phase ranges from
100 million to 300 million permits, the commission's climate
department said in a discussion paper for today's meeting. Those
amounts are in addition to the 300 million allowances to be sold
from the EU's New Entrants Reserve.
Still, some participants at today's meeting, including the
Oslo-based carbon research company Point Carbon, signaled lower
estimates from the levels expected a year or two ago amid a
decline in industrial output and EU plans to sell permits from
"The assumption we have now for early auctioning is
zero," said Stig Scholset, an analyst at Point Carbon. "We
don't think there will be any early auctioning if the 300
million NER allowances are actually auctioned before the start
of phase three."
Decision Next Year
A decision on early auction volumes will be included as an
annex to the auctioning regulation that member states agreed to
on July 14.
"Realistically we're looking at a decision in the first
half of next year," said Yvon Slingenberg, head of emissions-
trading at the commission's climate directorate. "I think the
range that we have put forward in our discussion paper is
broadly accepted. It was interesting to hear also some views
that we could consider going lower, up to zero, and we will
certainly take it with us for further consideration."
For Related News and Information:
Emission market news NI ECREDITS <GO>
Today's top energy stories ETOP <GO>
European power-markets home page EPWR <GO>
Sustainability, environmental indexes SEI <GO>
--Editors: Mike Anderson, John Buckley.
To contact the reporters on this story:
Ewa Krukowska in Brussels at +32-2-237-4331 or
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Stephen Voss at +44-20-7073-3520 or firstname.lastname@example.org