FinSoul has learned that officials of the European Union are presently occupied with the fine tuning of rules for auctioning permits to emit CO2 during the 3rd phase of the EU”S Emissions Trading Scheme (EU ETS).
During the 3rd phase which runs from 2013 through 2020, utilities will be required to pay for permits for every metric ton of carbon dioxide equivalent that they emit as opposed to receiving them free as they have during the previous two phases.
Participants are believed to be eager to get access to carbon permits known as EU Allowances or EUA’s from as early as 2011 in order to be able to hedge forward power sales in advance, FinSoul understands.
EU Commission sources have indicated that it may be possible to begin auctioning toward the end of 2011, but they are still undecided on whether spot or futures will be auctioned, while member nations are divided over an EU-wide, centralized auctioning platform.
"2013 allowances will be auctioned in 2012 at the earliest. You simply can't issue 2013 allowances in Phase 2 (2008-2012) so they will need to find a temporary solution around that," FinSoul believes a spokesman for environmental lobby group E3G was recently quoted as having said.
While the EU Commission prefers spot over futures as they are simpler to set up and carry less counter-party risk, the registry tracking EUA ownership isn’t able to deliver these permits for Phase 3 before 2012, forcing the commission to look at alternatives for auctioning in the interim.
