Germany, UK to start early Phase 3 EU CO2 auctions

Reuters News
Posted: Sep 28, 2012 7:39 AM
Germany, UK to start early Phase 3 EU CO2 auctions

LONDON (Reuters) - Germany's European Energy Exchange (EEX) and London-based ICE Futures Europe released details on Friday of the timings of early auctions of Phase Three European Union carbon permits on behalf of their respective governments.

The EU's Emissions Trading Scheme caps carbon emissions on more than 12,000 industrial and power plants across the 27-nation bloc and governments are allowed to sell a certain number of carbon permits each year.

The scheme's third trading period starts next year and lasts until 2020. During that time, power generators operating under the ETS will no longer receive the bulk of their carbon permits, called EU Allowances (EUAs), for free and most will be auctioned.

The EU Commission decided in 2011 that around 120 million EUAs for the third phase would be auctioned early to help power companies hedge forward power sales.

Market participants have been eagerly awaiting the timing of the early sales because the market is already over-supplied with over 1 billion permits which has put pressure on prices, sending them to a record low below 6 euros in April.

Data compiled by Thomson Reuters Point Carbon has shown that state-backed sales of EUAs could exceed 200 million units in the last three-and-a-half months of 2012.

EEX will auction a total of 23.5 million EUAs for the third trading phase over the rest of this year on behalf of the German government.

The exchange will begin the auctions on October 12, it said in a statement. Sales of 2.4 million EUAs will be held on its spot market every Friday from 0800-1000 GMT (0900 to 1100 CET). The last auction of the year will take place on December 14 and will sell around 1.93 million EUAs.

In addition, EEX will sell a total of 5 million EUAs for the aviation sector for the second trading phase (2008-2012) on the spot market in two auctions on October 17 and November 14.

EEX is currently still auctioning EUAs for the second trading period but the last auction on the derivatives market will be on October 31. Remaining volumes will be auctioned on the spot market every Tuesday from November 6. (

Meanwhile, ICE Futures Europe will hold two auctions on behalf of the British government on November 21 and December 5 at 0800-1000 GMT (0900-1100 CET), the EU Commission said on its website. The volumes to be sold were not disclosed.

The UK can auction a total of 12 million Phase 3 EUAs before the end of the year.

ICE will also hold two auctions of aviation EUAs on November 26 and December 10, also at 0800-1000 GMT, but no volumes were disclosed.

The EU Commission said both exchanges' final auction calendars for this year still need to be set formally.

"ICE can do so only after the approval procedure for the UK (auction) platform has been completed. This is expected for early November," it said.

Benchmark EUAs for December 2012 delivery edged down 1 cent at 7.85 euros ($10.10) a tonne at 1246 GMT. ($1 = 0.7775 euros)

(Reporting by Nina Chestney; editing by James Jukwey)