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Auctioning: Questions and Answers
How many allowances will each Member State have for auctioning?
All allowances which are not allocated free of charge will be auctioned. 88% of the allowances for auctioning are distributed to Member States on the basis of EU ETS emissions in the 2005-2007 period. 10% of the allowances are distributed to poorer Member States to take account of the lower GDP per head and higher prospects for growth and emissions. Another 2% of the allowances are distributed to nine Member States which in 2005 had achieved a reduction of at least 20% in greenhouse gas emissions compared with the reference year set by the Kyoto Protocol. Member States will be responsible for ensuring that the allowances assigned to them are brought into the EU-wide carbon market via auctions.
What use will be made of auction revenue?
Auction revenue accrues to Member States. The ETS Directive recommends that at least half the revenue, and all of the revenues from auctioning allowances in respect of aviation, should be used to fight and adapt to climate change and lists a number of purposes, mainly within the EU, but also in developing countries.
Has large-scale auctioning of emission allowances been practiced elsewhere?
No. However, several other countries and regions consider auctioning as the more efficient solution to allocate allowances when designing or implementing emission trading systems.
See also the Frequently Asked Questions on the auctioning of third trading period allowances