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Brussels, 14 July 2010

Emissions trading: Member States back unanimously Commission proposed rules for auctioning of allowances

The European Commission welcomes today's vote by the Climate Change Committee in support of the Commission's proposal for a Regulation governing the auctioning of emission allowances under the EU Emissions Trading System (EU ETS). The draft Regulation lays down the rules for auctioning emission allowances valid for the third trading period of the EU ETS starting in 2013 as well as allowances to be used by aircraft operators already as from 2012. The Commission will now submit the draft Regulation to the European Parliament and the Council for a three-month scrutiny period.

Connie Hedegaard, European Commissioner for Climate Action, said: "The Commission would have preferred a single platform. But some Member States insisted on the possibility to have their own platform.  So I am satisfied to see that Member States have found a compromise that will provide a basis for a solid common auction platform and that Member States can opt out of this common platform provided they meet certain criteria that ensure the proper functioning of auctions and the carbon market."

Greater role for auctioning

From the start of the third trading period in 2013 auctioning will progressively replace free allocation as the main method for allocating allowances to all EU ETS sectors except aviation. In 2013 at least half of the total volume of allowances is expected to be auctioned. For aviation, 15% of allowances will be auctioned in 2012 and this proportion will stay the same in subsequent years.

The draft Regulation approved today covers auctions of allowances valid for the third and later trading periods, including any early auctions of such allowances before 2013. In addition, the Regulation covers so-called 'aviation allowances' as from 2012 which can be used for compliance by aircraft operators only.

A solid common auction platform

The draft Regulation provides for Member States and the Commission to procure jointly a common platform to auction emission allowances on behalf of the Member States. A common auction platform is expected to be the most cost- efficient approach for Member States and bidders. The Commission considers that a common platform best ensures respect of the principles of non-discrimination, transparency and simplicity, provides the best guarantees for full, fair and equitable access to small and medium sized enterprises covered by the EU ETS and small emitters, and best minimises the risk of market abuse. Nevertheless, Member States that wish to appoint an auction platform of their own are allowed to do so, since the Regulation provides for adequate rules as to the functioning of such auction platforms and the coordination with the common auction platform.

A simple auction format and a predictable auction calendar

The draft Regulation provides for a simple "single-round, sealed-bid, uniform-price" auction format which is easily accessible for ETS operators and other eligible bidders. It also provides for a predictable auction calendar with annual volumes being determined automatically on the basis of a straightforward rule in the Regulation. The auction platforms will decide and publish the details of individual auctions for a given calendar year almost a year in advance. The volume of allowances to be auctioned in 2012 will be determined at a later stage.

Access for small emitters and mitigating risk of market abuse

The requirement of full, fair and equitable access to small and medium-sized enterprises covered by the EU ETS and small emitters has been taken into account in the proposal and this will be an important criterion when procuring an auction platform. The draft Regulation also provides the necessary legal framework to minimise any risk of money laundering, terrorist financing, financial crime, insider dealing and market manipulation.

Next steps

Provided that the European Parliament and the Council do not raise objections, the Commission will adopt the Regulation once the three-month scrutiny period is over. The Commission will start the preparations for the procurement of the common auction platform, jointly with the participating Member States, without delay.

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