Emission rights auction during the trading period 2013 - 2020
Under the Emissions Trading Directive, from the beginning of 2013, auctions will be the primary means of allocating emission rights. With the portion of emission rights to be auctioned growing over the coming years, the free allocation of emission rights will decrease, resulting in a situation where more than half of emission rights for a particular trading period will be put into circulation at auctions.
Auctions will primarily be organised from the EU’s common auction platform, which provides a channel for auctioning the emission rights of all 24 member states. Germany, the United Kingdom and Poland will not auction their emission rights on the common auction platform; instead, they will hold their own auctions, known as opt-out auctions. Operators in the emission trading system, fund management companies and other actors that, under the Auctioning Regulation (2010/1031/EU), are entitled to participate in auctions, may do so at any auction.
Auctioning of the emission rights for the emission trading period of 2013 – 2020 will commence as early as in 2012, at what are known as early auctions, with a set target of 120 million sold emission rights. Auctions will be held at the common auction platform, at a minimum of once a week, during the course of the emission trading period. Since opt-out auctions are also held weekly, emission rights will, in practice, be auctioned on most days of every week. Detailed auction calendars will be confirmed after the auction platforms have been selected.
Auctions will be held in completely electronic format, using network connections, with English serving as the interface language. The auction mechanism chosen is the single-round sealed-bid auction, at which the bidders submit their proposals unaware of the bids of others; in other words, the auction clearing price will be determined by the lowest bid. This means that all winning bidders will ultimately pay an equal price for their emission rights. Emission rights are auctioned in batches of 500 or 1,000, with the clearing of the transaction and the transfer of emission rights to the buyer’s account taking place within two to five days from the auction, depending on the merchandise.
The functioning of auctions across the EU is monitored by an auction monitor, specifically selected for this role. The monitor is obliged to ensure that no misconduct occurs at auctions and that every aspect of the auctions is performed in accordance with the Auctioning Regulation.