EU Emissions Trading
System: Volume of carbon allowances for the second UK auction and
timetable for future auctions
DEPARTMENT OF ENERGY
AND CLIMATE CHANGE News Release (Reference: 2009/021) issued by COI
News Distribution Service. 23 February 2009
The UK government
intends to auction Four million allowances in its second auction
as part of the EU ETS on Tuesday 24 March 2009. In 2009 the UK
plans to auction a total of 25 million allowances.
The auction on 24 March will comprise a competitive bidding
facility only and the bidding window will be open between 8:00 and
10:00 GMT. The UK Government intends to charge VAT on all EU
allowances auctioned in the UK.
The UK Government has also published a schedule of auction dates
and volumes for subsequent auctions up to April 2010. The full
schedule is available on the UK Debt Management Office's
website at: http://www.dmo.gov.uk/index.aspx?page=ETS/AuctionInfo
Notes to Editors
1. The Treasury has appointed the Department of Energy and
Climate Change (DECC) to conduct the auctions and DECC has
appointed the UK Debt Management Office (DMO) to act as the
official agent running EU ETS auctions.
2. On the 19th November 2008 the UK successfully held the first
Phase II auction in EU ETS allowances, selling four million EUAs
at a total value of £54m excluding VAT.
The UK plans to implement a non-competitive bidding facility as
part of the auction later in 2009 in order to give compliance
buyers the option of accessing up to 10,000 EUAs at the clearing
price of the auction.
3. European Union Emissions Trading System in Phase II
(2008-2012) currently covers around 12,000 installations including
large energy generators, cement manufacturers and chemical plants.
These sectors are collectively responsible for close to half of
the EU's emissions of carbon dioxide. The EU ETS aims to
reduce emissions of carbon dioxide at least cost to industry.
4. The EU ETS works on a "cap and trade" basis. EU
governments are required to set an emissions cap for all
installations covered by the System. Each installation will then
be allocated allowances for the particular commitment period in
question. The number of allowances allocated to each installation
for any given period is specified in a document called the
National Allocation Plan (NAP). If an installation fails to
surrender sufficient allowances to cover its annual emissions, it
will face financial penalties (currently set at 100 Euros per
tonne); the requirement to surrender sufficient allowances to
cover emissions still applies.
5. The UK NAP for the second trading period (2008-2012) sets
aside 7% of the allowance cap for auctioning, amounting to
approximately 86 million allowances over the Phase. The UK NAP can
be found at: http://www.defra.gov.uk/environment/climatechange/trading/eu/pdf/nap-phase2.pdf
6. The Government has already approved four Primary Participants
to facilitate the competitive stage of the auctions - Barclays
Capital, JP Morgan, BNP Paribas and Morgan Stanley. Contact
details for Primary Participants can be found on the DMO's
website at: http://www.dmo.gov.uk/index.aspx?page=ETS/Approved
7. Further details about EU ETS are available on the Department
of Energy and Climate Change website: http://www.defra.gov.uk/environment/climatechange/trading/eu/index.htm
Department of Energy and Climate Change
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