Reuters: Regulatory News: UPDATE 1-ICE Futures Europe to auction UK CO2 permits

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UPDATE 1-ICE Futures Europe to auction UK CO2 permits Apr 23rd 2012, 12:05 Mon Apr 23, 2012 8:05am EDT * Contract subject to EU approval * Auctions may start as early as November * Minister says contract ensures timely auctions LONDON, April 23 (Reuters) - Britain has awarded a contract to ICE Futures Europe to auction carbon permits in the third phase (2013-2020) of the European Union emissions trading scheme in a move that will boost volume on the most liquid carbon bourse. The UK, Germany and Poland have opted out of joining a common EU-wide auction platform and decided to set up their own national ones. "This announcement is an important step towards ensuring that we can start auctioning phase III and aviation allowances on time," Greg Barker, the UK's minister of energy and climate change, said he said in a statement. Emissions permits are sold to power and industrial plants as well to the aviation sector. They could be auctioned as early as November, subject to approval by the European Union, which oversees the world's biggest carbon market for the 27-nation bloc. The UK plans to sell 12 million of the phase three carbon permits called EU Emissions Allowances this year, with an additional seven million permits for the aviation sector, a Department of Energy and Climate Change spokeswoman said. Around 130 million EUAs are to be sold annually from 2013. Since 2005, the EU carbon market has set a cap on carbon dioxide (CO2) emissions that can be emitted by around 12,000 factories, power plants and other major polluters. This covers around half of the bloc's emissions. Within this cap, companies receive emission allowances - most for free - which they can sell to or buy from one another as needed. Starting next year, EU member states aim to sell around half, or about 1 billion emissions allowances per year, as the bloc moves towards charging all companies for them. EU rules allow member states to sell up to 10 percent of their allowances in the 2008-2012 trading period, although much less was sold. The UK had opted to auction at least 7 percent of its allowances compared to the EU average of 3 percent. Since 2008, the UK government has raised 1.38 billion euros ($1.82 billion) from carbon auctions hosted by the government's Debt Management Office. ICE Futures won the tender to take over the auctioning, beating out rivals such as the Liepzig-based European Energy Exchange in Germany and BlueNext in Paris. "ICE Futures Europe is delighted to be the preferred supplier for the UK government emissions auction which, once implemented, will further enhance liquidity across our range of emissions products," a spokeswoman told Reuters. Link this Share this Digg this Email Reprints

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