Auctioning is the default method for allocating emission allowances to companies participating in the EU emissions trading system (EU ETS). However, in sectors other than power generation, the transition to auctioning is taking place progressively. Some allowances continue to be allocated for free until 2020 and beyond.
The continuation of free allocation allows the EU to pursue ambitious emissions reduction targets while shielding internationally competing industry from carbon leakage.
Over the current trading period (2013–2020), 57% of the total amount of allowances will be auctioned, while the remaining allowances are available for free allocation.
Free allocation decreases each year
At the beginning of the current trading period, manufacturing industry received 80% of its allowances for free. This proportion will decrease gradually each year to 30% in 2020.
Power generators since 2013 in principle do not receive any free allowances, but have to buy them. However, some free allowances are available to modernise the power sector in some Member States.
Airlines continue to receive the large majority of their allowances for free in the period 2013-2020.