EU Carbon Allowances Auctioning Regulation adopted by EU Commission

On Friday the EU Commission formally adopted the necessary regulation for introducing auctioning of EU Allowances (EUAs) within the European Trading Scheme (ETS).  Until now the vast majority of allowances have been provided free to the 12,000 or so large carbon emitting installations in the Community. For phase 3 of the ETS, covering the period 2013 – 2020, most allowances will need to be purchased at auction, making it more expensive to pollute and, hopefully, having a greater environmental impact.

The regulation allows for the creation of a central auctioning platform for the whole EU but, due to pressure from a couple of large members, also allows countries that wish to develop their own auctioning platform to do so, within specific guidelines.

The next steps in the process are to select and build the central auctioning platform and for those countries wishing to opt out to formally announce their intention of doing so. It had earlier been hoped to begin auctioning of phase 3 allowances in 2011. That will not now be possible due to the work still to be done.

The regulation and supporting documentation from the Commission can be found here.

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