Questions and Answers: Auctioning
The ETS Directive contains the general principle that all allowances not allocated free of charge are to be auctioned. The annual volumes of general allowances to be auctioned and the timing and frequency of auctions are regulated in Chapter III and the volumes of aviation allowances in Chapter II of the Auctioning Regulation.
In Recital 26 of its Decision 2013/448/EU of 5 September 2013 on the national implementation measures with respect to free allocation, the Commission estimated, in accordance with Article 10(1) of Directive 2003/87/EC (ETS Directive), the amount of general allowances to be auctioned in the period from 2013 to 2020 at 8,176,193,157. This amount can be broken down as follows and is used in the determination of the annual auction calendars:
|Year||Estimated Amount||Estimated amount after deducting the maximum transitional free allocation for electricity generators(1)||Amount published in the auction calendars or foreseen to be auctioned(2)|
|Cumulative withheld allowances (5)||26,031,000|
|Withheld allowances to be placed directly into the Market Stability Reserve (6)||900,000,000|
- volumes to be allocated free of charge pursuant to Article 10c of the ETS Directive.
- taking into account allowances withheld for the purposes of back-loading, pursuant to Regulation (EU) No 176/2014 of 25 February 2014, and to be placed directly in the Market Stability Reserve pursuant to Article 1(2) of Decision (EU) 2015/1814 (MSR Decision) of 6 October 2015.
- volume for early auctions, taken into account in subsequent years.
- figures for 2019 onwards do not yet incorporate further adjustments to the amounts to be auctioned pursuant to Articles 1(5), 1(6) and 1(7) of Decision (EU) 2015/1814 (MSR Decision) of 6 October 2015. On the basis of the estimated amount of surplus allowances mentioned in recital 5 of the MSR Decision it is expected that the application of these articles will result in an adjustment consisting of further deductions from the volume of allowances to be auctioned.
- cumulative withheld volume in accordance with the published auction calendars pending the start of auctions for the EEA-EFTA States. The volumes for such States will be added in relevant auction calendars as from completion of the necessary arrangements for their auctioning and the table will be adapted accordingly.
- pursuant to Article 1(2) of Decision (EU) 2015/1814 ( MSR Decision) of 6 October 2015.
- the difference with the total of the previous column is equal to volume of the Article 10c non allocated volumes that are added to the auctions as from 2015 (7,809,757 allowances in 2015 and 8,451,400 allowances in 2016).
- Figures for 2012 to 2016 represent the volumes auctioned or to be auctioned in accordance with the published auction calendars. The 2013 volume had been determined on the basis of a conservative working estimate in the absence of the final information on the free allocation. Furthermore, certain States did not complete the administrative steps to allow auctioning in time, hence their volumes have been withheld. The cumulative withheld volume of 26,031,000 allowances in accordance with the published auction calendar pending the start of auctions for the EEA-EFTA States, is included separately in the table. At the moment of publication of 2016 auction calendars, the 733,765,000 allowances to be auctioned in 2016 plus the cumulative withheld volume of 26,031,000 allowances amounted in total to 759,796,000 allowances. This is without prejudice to the timing and modalities for the auctioning of the withheld volumes which will be announced in due course. Figures for 2017 onwards represent the estimated volumes to be auctioned, and without prejudice for any adjustment that may arise from the application of the Market Stability Reserve from 2019 onwards.
- As of entry into force of Commission Regulation (EU) No 1210/2011 (Backloading Regulation) of 23 November 2011 amending the Auctioning Regulation for postponing the auctioning of part of the allowances under the 'back-loading', 400 million allowances were withheld in 2014, 300 million in 2015 and 200 million in 2016. In 2014, the total amount of 400 million allowances withheld has been distributed per Member State/EEA EFTA State and the 2014 volumes have been reduced by the corresponding volumes. For Cyprus and Poland, given their allocation of free allowances pursuant to Article 10c of the ETS Directive, the 2014 volumes to be auctioned were less than the volumes to be withheld for the purposes of back-loading, so a corresponding adjustment is done in subsequent years, as provided for by the Regulation Amendment. The adjustment is 738,500 allowances for Cyprus and 6,196,500 allowances for Poland. For Poland this adjustment was fully done in 2015. For Cyprus, taking into consideration the aforementioned adjustment and the 2015 and 2016 volumes withheld for the purposes of back-loading, no allowances are auctioned in 2015 nor 2016, with an adjustment of 246,644 withheld allowances for the purposes of back-loading still to be done in subsequent years. Pursuant to Article 1(2) of Decision (EU) 2015/1814 (MSR Decision) of 6 October, the 900 million allowances withheld for the purposes of back-loading will be placed directly into the Market Stability Reserve.
- The Commission's estimated amount determined in Recital 26 of the Decision 2013/448/EU of 5 September 2013 (NIMs Decision) takes into account all allowances handed out for free, including those for planned modernisation investments in the electricity sector in 8 Member States, and is based on the carbon leakage list valid at that moment. Pursuant to Article 1(3) of Decision (EU) 2015/1814 (MSR Decision) of 6 October 2015, any volumes arising from the reason listed in ninth subparagraph of Article 10(2) of the Auctioning Regulation (so-called "unallocated allowances") will be placed directly into the Market Stability Reserve.
- In accordance with the Auctioning Regulation and as further specified in the resulting contracts, any difference between the volumes determined in the auction calendars and the figures determined according to Article 10(1) of the ETS Directive, due to the estimation or the withholding of allowances for certain States, is added to the volume to be auctioned in the subsequent year.
- The volumes that were foreseen for free allocation pursuant to Article 10c of the ETS Directive that were not allocated in previous years by the Member State concerned (for example if investments set out in the national plan and justifying the allocation have not been carried out) are to be auctioned. Accordingly, the volumes as notified by the Member State concerned are added to the auction calendar of the following year, as of 2015.
- The amount to be auctioned or withheld each year per Member State/EEA-EFTA State is rounded down to a multiple of 500 allowances per state; the remaining amount is carried over to the next year.
- Accordingly, the volumes for 2017 onwards are indicative and the final volumes depend on adjustments related to free allocation, re-introductions of small emitters pursuant to Article 27 of the ETS Directive, retained or carryover volumes. A precise calculation is made each year, which is published by the auctioning platforms through the auction calendars, which are the only valid documents with definitive volumes to be auctioned per year.
15% of the EU aviation allowances for the third trading period are to be auctioned pursuant to Article 3d of the ETS Directive. The Auctioning Regulation further specifies in Article 12(1) and (2) that the volumes to be auctioned each year shall be 15 % of the expected volume of aviation allowances in circulation for that year. In case the auctioned volume for a given year is more or less than 15% of the volume actually put into circulation for that year, the volume to be auctioned in subsequent years is corrected for the difference.
The volume of aviation allowances to be auctioned is further determined in accordance with the derogations provided in the Decision No 377/2013/EU and the Regulation (EU) No 421/2014, and on the basis of the final number of aviation allowances put in circulation for 2012 and on an estimate of the number of aviation allowances to be handed out for free for 2013 to 2016.
In 2012 2.5 million aviation allowances were auctioned, prior to the Decision No 377/2013/EU ( stop-the-clock-decision) and the auctions were resumed in 2014 with a volume of 9.2 million, followed by 10.9 million in 2015 . For 2016 5,997,500 aviation allowances will be auctioned, based on at estimate of expected aviation allowances in circulation for 2016 established on the basis of the National Aviation Allocation Tables at the times of determining the calendar and a correction of 343,350 aviation allowances for 2013 and 2014 pursuant to Articles 12(1) and (2) of the ETS directive.
The volume of aviation allowances for the EEA-EFTA States is withheld pending the start of auctions for these States, corresponding to a cumulative amount of 1.1 million aviation allowances.
For further information on the aviation activities in the EU ETS see also the Questions & Answers on the proposal to temporarily 'stop the clock' under the EU's Emission Trading System (EU ETS) for flights to and from European airports and the Frequently Asked Questions on the 2013-2016 Regulation amending the EU Emissions Trading System for aviation .
The auction calendars with exact dates and volumes of general allowances and aviation allowances to be auctioned in the current year are published by the auction platforms :
All allowances which are not allocated free of charge are auctioned. Pursuant to Article 10(2) of the ETS Directive, 88% of the allowances for auctioning are distributed to Member States on the basis of EU ETS emissions in 2005 or the average of the 2005-2007 period, whichever is the highest. 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.
For some States, the administrative steps to allow auctioning of the allowances were not completed on time, and the expected volumes were withheld and included in the volumes to be auctioned in subsequent years. This concerned some Member States as indicated in the table below and currently concerns the EEA-EFTA States.
The table below gives an overview of the dates as from which the Member States and EEA EFTA States started auctioning phase 3 allowances:
|Member/EEA EFTA State||Date|
|Germany||As from 26 October 2012|
|UK||As from 21 November 2012|
|Austria, Bulgaria, Finland, France, Italy, Latvia, Romania, Slovenia, Slovakia, Spain and Sweden||As from 13 November 2012|
|Netherlands||As from 20 November 2012|
|Cyprus, Lithuania Luxembourg, Portugal||As from 27 November 2012|
|Greece||As from 4 December 2012|
|Hungary, Malta||As from 11 December 2012|
|Denmark||As from 18 December 2012|
|Estonia, Belgium||As from 7 January 2013|
|Ireland||As from 18 February 2013|
|Czech Republic||As from 18 March 2013|
|Poland||As from 16 September 2013|
|Croatia||As from 8 January 2015|
|EEA EFTA states||pending|
Information can be found in the section Reducing emissions from aviation.
The auction calendars with exact dates and volumes of general allowances and aviation allowances to be auctioned per Member State in the current year are published by the auction platforms:
|EEX||Participating Member States/EEA EFTA States||Weekly auctions on Mondays, Tuesdays and Thursdays|
|EEX||Germany||Weekly auctions on Fridays|
|ICE||United Kingdom||Fortnightly auctions on Wednesdays|
|EEX||Poland||Monthly auctions on Wednesdays from 8 January to 5 March 2014.|
Information on the timing, frequency and volume per auction are published by the auction platforms through the auction calendars in due time before the start of the auctions.
The auction calendars with exact dates and volumes of general allowances and aviation allowances to be auctioned per Member State in the current year are published by the auction platforms. Further, they publish information on the auction results after each auction:
The auction reports published pursuant to Article 10(4) of Directive 2003/87/EC include further details on the auctions for the 25 participating member states, Poland, the United Kingdom and Germany.
The Auctioning Regulation provides for a common auction platform but gives Member States the possibility to opt-out and appoint their own auction platform. Germany, Poland and the UK have made use of this option.
At present, two platforms are auctioning allowances under the Auctioning Regulation:
- European Energy Exchange (EEX) in Leipzig is the common auction platform used by 25 Member States, following a procurement procedure jointly with the Commission; EEX also serves as Germany’s opt-out auction platform;
- ICE Futures Europe (ICE) in London is the United Kingdom’s opt-out auction platform.
Poland also intends to appoint an opt-out auction platform but is using the common auction platform in the meantime.
The EEA-EFTA States will auction on the common auction platform as well.
An overwhelming majority of stakeholders, a large majority of Member States and the Commission's impact assessment supported a single EU-wide auction platform as it would best meet all objectives laid down in the revised EU ETS: it is most cost efficient, most transparent, best ensures respect of the principle of non-discrimination, and offers the greatest level of harmonisation and predictability as compared to auctioning through two or more parallel national auction platforms.
Opt-out auction platforms must conform with the framework set out in the Auctioning Regulation, which provides for further rules to ensure adequate coordination between the opt-out auction platforms and the common auction platform.
The maximum appointment duration for any auction platform is five years. EEX has been appointed as the common auction platform for three years, renewable for one additional year. The contract runs until August 2016. EEX has also been contracted as Germany’s platform. Its first appointment was until December 2013; its second appointment runs for an additional three years, renewable for a further two years. ICE was contracted in November 2012 as the UK’s platform for a duration of three years, renewable for a further two years; in March 2015 the contract was extended to November 2017.
Since the coexistence of the common auction platform and the opt-out auction platforms inevitably implies less than full harmonisation of the auction process, the arrangements put in place in the Auctioning Regulation will be reviewed in the light of the report on the auctions performed in 2014. The review of the Auctioning Regulation will be carried out in consultation with Member States and stakeholders.
Questions and Answers: Auctioning and its regulation
In the context of the 2030 climate and energy framework European leaders decided in October 2014 that free allocation will continue after 2020 to prevent the risk of carbon leakage due to climate policy, as long as no comparable efforts are undertaken in other major economies, with the objective of providing appropriate levels of support for sectors at risk of losing international competitiveness. However, the share of allowances to be auctioned will not decrease.
Member States with a GDP per capita below 60% of the EU average may opt to continue to give free allowances to the energy sector up to 2030. However, the maximum amount handed out for free should be limited and the current modalities, including transparency, improved to ensure that the funds are used to promote real investments modernising the energy sector, while avoiding distortions of the internal energy market.
In terms of Member States' shares in the auctioning volume, 90% of allowances to be auctioned will be distributed among all Member States on the basis of verified emissions. The rest will be distributed among those countries whose GDP per capita did not exceed 90% of the EU average (in 2013) for the purposes of solidarity, growth and interconnections.
With the start of the third trading period in 2013, auctioning is progressively replacing free allocation as the main method for allocating allowances to all EU ETS sectors except aviation. This best ensures the efficiency, transparency and simplicity of the system and creates the greatest incentive for investment in a low-carbon economy. Auctioning will also eliminate windfall profits, which arise when operators charge their customers the cost of allowances they have received for free.
The revised EU ETS Directive adopted in 2009 required the European Commission to adopt a Regulation on the timing, administration and other aspects of auctioning to ensure that auctioning is conducted in an open, transparent, harmonised and non-discriminatory manner. This must support the overarching aims of the revision of the EU ETS, namely greater efficiency of the system, more harmonisation, avoidance of distortion of competition and greater predictability. All these objectives would be at risk without appropriate rules.
The importance of these rules is underpinned by their legal form: a Regulation is the strongest form of EU legislation and its rules are directly applicable in all Member States.
The Auctioning Regulation was adopted by the Commission on 12 November 2010.
The auction format is a single-round, sealed bid, uniform price auction. This is a simple auction format that facilitates participation, including by SMEs and small emitters covered by the ETS Directive.
During a single bidding window of the auction, bidders can place any number of bids, each specifying the number of allowances they would like to buy at a given price. The bidding window is open for at least two hours. Directly following the closure of the bidding window, the auction platform determines and publishes the clearing price at which demand for allowances equals the number of allowances offered for sale in the auction concerned.
Successful bidders are the ones who have placed bids for allowances at or above the clearing price. All successful bidders pay the same price, regardless of the price they specified in their bids.
The Auctioning Regulation provides for allowances to be auctioned in the form of spot products, which means delivery within a maximum of five working days after the auction. The auctioned product may or may not be a financial instrument in the meaning of the EU regulatory framework for markets in financial instruments. The products auctioned by EEX and ICE are not such financial instruments; exact product specifications are available on the auctioning webpages of EEX and ICE.
Spot products have been chosen for their simplicity and because, unlike futures, they do not lock in the trading of the auctioned allowances to the auction platform(s), which could have a potentially negative impact on competition between trading places in the secondary market.
Auctions are held by auction platforms appointed by national governments but each auction is open to buyers established anywhere in the EU and the EEA-EFTA. The following are eligible to apply for admission to bid in the auctions:
- ETS operators and aviation operators, and their parent, subsidiary or affiliate undertakings.
- Business groupings of operators or aircraft operators acting as an agent on behalf of their members. The concept of "business grouping" requires the existence of a multi-lateral legal relationship between several ETS operators and/or aircraft operators such as a partnership, joint venture or association of such operators and/or aircraft operators. The business grouping must have its own (incorporated or unincorporated) legal identity and statute which clearly indicates that the business grouping is controlled by ETS operators and/or aircraft operators. For bidding in the auctions directly on its own account and acting as an agent on behalf of its members, the business grouping could employ the services of in-house or outside traders who must be natural persons acting as the bidder's representative.
- Public bodies or state-owned entities that control ETS operators or aviation operators.
- Investment firms and credit institutions authorised and regulated under EU law. Once admitted, they can bid on their own account. They may also bid on behalf of clients provided that they are authorised to do so by the national competent authority. Such authorisation must be valid with respect to the auctioned products which, as currently auctioned by EEX and ICE, do not constitute a financial instrument under EU legislation for financial markets. Information on the implementation by Member States of the provisions in the Auctioning Regulation concerning the requisite authorisation can be found in this notice.
- Persons exempt from the authorisation requirements in EU financial law because their trading and investment services activities are only ancillary to their main business (Article 2(1)(i) of Directive 2004/39/EC), but who are authorised under national legislation implementing the rules laid down in the Auctioning Regulation. As is the case for investment firms and credit institutions, they may also bid on behalf of clients provided they are authorised by the national competent authority to do so. Information on the implementation by Member States of these provisions can be found in this notice.
Where investment firms, credit institutions or exempt persons bid on behalf of their clients, they shall ensure that those clients are themselves eligible to apply for admission to bid, i.e. are included in one of the categories above.
See Article 18 of the Auctioning Regulation for the precise wording on the above.
Unauthorised brokers are not eligible to apply for admission to bid, but could play a role in facilitating the formation of business groupings. An interesting and relatively easy business opportunity for a broker might be to form a European Economic Interest Grouping (EEIG) made up solely of operators and/or aircraft operators. This is a relatively cost-effective means of establishing a business grouping under EU law allowing for cross-border membership. Such an EEIG could then apply to be admitted to bid directly in the auctions and could appoint traders employed by the broker to act as their bidder's representative within the meaning of Article 6(3) of the Auctioning Regulation.
Neither the auctioneer nor the auction platform or its staff may apply for admission to bid.
The auction platform must consider each application for admission in order to prevent auctions being used as a vehicle for money laundering, terrorist financing, criminal activity or market abuse. The auction platform must carry out customer due diligence checks. Complete information on the admission process and criteria can be found on the websites of EEX and ICE.
The Auctioning Regulation thus strikes a balance between the objectives of openness, effective competition and mitigating the risk of money laundering, terrorist financing, criminal activity or market abuse.
Once admitted, bidders are able to access the auctions through the internet. The auction platforms also offer dedicated connections. EEX, furthermore, offers a possibility to submit bids by fax. Complete information on the means of access can be found on the websites of EEX and ICE.
SMEs covered by the EU ETS as well as small emitters can access the auctions directly after going through the due diligence checks. They may also access the auctions through an intermediary or form a business grouping to act as an agent on their behalf. This may offer them the advantage of minimal transaction costs as well as certainty on the price and quantity of allowances they wish to receive.
The design of the auctions has been made as simple as possible to facilitate participation by SMEs. For example, all successful bidders pay the same clearing price so that SMEs and small emitters will not be disadvantaged by having less knowledge than larger participants.
Both EEX and ICE have measures in place to facilitate access for SMEs covered by the EU ETS, as well as for small emitters.
Each Member State appointed an auctioneer to be able to auction its share of allowances. The auctioneer is responsible for offering the allowances to be auctioned to the auction platform on behalf of the appointing Member State. It also receives the auction proceeds and disburses these proceeds to the appointing Member State.
The auctioneer may be a private or public body. A list of auctioneers can be found under the Documentation tab at the top of this page.
The auction platform must be a regulated market authorised under EU financial markets legislation.
Regulated markets have been chosen because they are bound by EU law (the 'Markets in Financial Instruments' Directive and the 'Market Abuse' Directive) to provide a number of safeguards in the conduct of their operations. These safeguards include, among others, arrangements to identify and manage the potential adverse consequences of any conflicts of interest, to identify and manage risks that the market is exposed to, and to have transparent and non-discretionary rules and procedures for fair and orderly trading.
Fair and orderly auctioning is ensured, firstly, by provisions in the Auctioning Regulation on access to the auctions and on the determination and publication of the auction calendars. The auction platform is obliged to ensure that appropriate ‘know-your-customer’ checks are carried out before it grants admission to any potential bidder.
Secondly, the auction platform must be a regulated market, which ensures that it meets strict standards and will be supervised by the competent national authority for financial markets of the Member State in which it is located.
The Auctioning Regulation includes detailed provisions to mitigate the risk of anti-competitive behaviour. Depending on the product auctioned, the auctions will be covered either by the Market Abuse Directive or by detailed provisions that provide equivalent protection.
Finally, in order to ensure fair treatment of clients, the Auctioning Regulation lays down an authorisation requirement and rules of conduct for intermediaries in case they are not covered by the rules of conduct provided for in the EU Financial legislation. It is, however, optional for Member States to put in place a legal framework for the authorisation of such intermediaries.
More information on carbon market oversight is available on the page 'Ensuring the integrity of the European carbon market'.
The Auctioning Regulation provides for a single independent auction monitor for all auctions on all auction platforms, to be chosen through a competitive procurement procedure conducted jointly by the Commission and all Member States.
The Auctioning Regulation foresees an integral role for the auction monitor in the oversight of the auctions. Each month, it is to submit a report to Member States and the Commission on all auctions conducted that month. It is to produce a consolidated annual report on the functioning of the auctions, including any evidence of anti-competitive behaviour, market abuse, money laundering, terrorist financing or criminal activity, and the impact of auctioning on the secondary market for allowances. Non-confidential versions of these reports will be published on the Commission's website.
The single auction monitor may also be asked to prepare ad hoc reports on a specific issue relating to auctioning. Furthermore, in light of a suspected breach of the regulation by an auction platform, the single auction monitor must draw up a report stating the nature of the breach, making recommendations to remedy the situation and, if appropriate, recommend the suspension of the auction platform.
Two procurement procedures were launched in 2012 and 2013 respectively, but the contract could not be awarded. The Commission and the Member States are currently assessing their options.
Auctions and auction platforms are supervised at various levels:
- supervision of the organisation and conduct of auction platforms;
- supervision of the organisation and conduct of professional intermediaries bidding on behalf of clients;
- supervisions of transactions to prevent market abuse;
- supervision of transactions to prevent money laundering and terrorist financing.
These different layers of supervision are interlinked and complementary.
Authorisation and supervision of an auction platform rests with the competent national authorities of the Member State in which an auction platform is located. The rules that apply to an auction platform's organisation and conduct are those of the Markets in Financial Instruments Directive (2004/39/EC) and of the Auctioning Regulation.
Professional intermediaries like investment firms, credit institutions or other persons authorised to bid in EU ETS auctions on behalf of others are also licensed and supervised by the relevant national (typically financial) authorities of the Member State where they are located. When bidding on behalf of clients in the auctions, such intermediaries have to abide by the rules set out in the Auctioning Regulation and/or in Directive 2004/39/EC.
Rules against market abuse, set out in the Auctioning Regulation and in the Market Abuse Directive (2003/6/EC), apply to behaviour and transactions of any bidder in the EU ETS auctions. On-going supervision in this area is primarily left to competent authorities of the Member State where an auction platform is located, but competent authorities of other Member States are also empowered to act and their involvement may be indispensable in cross-border investigations and enforcement.
The Financial Intelligence Unit (FIU) in the Member State where the auction platform is located is the competent national authority for combating money laundering and terrorist financing. It is responsible for supervising the auction platform and must ensure compliance of the auction platform with its obligations under the Auctioning Regulation in relation to customer due diligence, the monitoring and record keeping of the relationship with the bidders, surveillance of the auctions, and related notification requirements. The FIU in the Member State where the auction platform is located cooperates with other FIUs through the FIUs Platform and with the national law enforcement authorities in order to effectively prevent and sanction money laundering and terrorist financing, in accordance with Directive 2005/60/EC.
In addition, once appointed, the auction monitor will monitor and report to Member States and the Commission on the functioning of all auctions on all platforms, on the compliance of the auction processes with the objectives of the ETS Directive and the provisions of the Auctioning Regulation and on any evidence of anti-competitive behaviour or market abuse.
The supervision by the competent authorities and the auction monitor is without prejudice to the obligation on the auction platform to survey the auctions itself.
The costs of the auction process, including the costs of setting up the technical infrastructure, the actual conduct of the auctions and carrying out due diligence checks on bidders, will in general be paid for by the bidders through the fixed and variable fees they pay to an auction platform to participate in the auctions.
The costs of the single auction monitor will be deducted from the auction proceeds and will be borne by the Member States.
Yes, the Auctioning Regulation will be reviewed following the annual auctioning report for the year 2014.
The review will be carried out in consultation with Member States and stakeholders. The Commission will put forward any measures deemed necessary to deal with any distortion or malfunctioning of the internal market or the carbon market arising from the arrangements under the Regulation with a view to their entry into force by 31 December 2016.
This does not preclude the findings of a wider, ongoing work stream pursuant to Article 12(1a) of the ETS Directive, which is examining whether the EU ETS allowances market is sufficiently protected from market abuse. This work is also concerned with organising the oversight of the European carbon market and securing the market integrity of auctioning and trading.
Were the opinions of stakeholders considered in the drawing up of the Auctioning Regulation? Has the Commission prepared an impact assessment?
Yes, all information on consultations held and on the Commission's impact assessment can be found on the consultation page.
Yes, several other countries and regions auction allowances under emission trading schemes other than EU ETS, or are considering doing so. Further information can be found in the ICAP report. The annual volumes to be auctioned under the EU ETS are by far the largest, however.
Questions and Answers: Joint procurement of the single auction monitor and the common auction platform
Where can information on the procurement procedures for the common auction platform or the auction monitor be found?
Contract Notices are always published on Tender Electronic Daily (TED), the electronic version of the supplement S to the Official Journal of the European Union. Full tender documents are made available on DG CLIMA's contracts and grants page.
The Commission has published a notice on the Member States' implementation of the Auctioning Regulation and on transparency measures with regard to the documents relating to the call for tenders. As set out in this notice, the Commission may publish draft tender documents in order to ensure maximum transparency and equal treatment during the procedure.
The publication of such drafts does not constitute publication or advertising within the meaning of Article 90(1) of the Financial Regulation nor Articles 118, 119 and 120 of the Implementing Rules. Any part of such drafts may be changed; the drafts are not binding on the Commission or the Member States taking part in the joint procurement. Only the notices and associated documents relating to the call for tenders published in the OJ shall be authentic.
The Commission is the sole contact point for candidates and tenderers. An information note sets out the rules for contacts with economic operators on matters pertaining to the joint procurement procedures.
The Prior Information Notice for the second common auction platform was published in OJ 2014/S 118-208551 of 21 June 2014.
The Contract Notice for the second common auction platform was published in OJ 2014/S 211-372946 of 1 November 2014, and the full tender documents are available on DG CLIMA's contracts and grants page.
Two procurement procedures for a procurement of the auction monitor were launched in 2012 and 2013 respectively, but the contract could not be awarded. More information can be found on the contracts and grants webpage.
On 21/06/2014 the Commission published a Prior Information Notice announcing the upcoming tender procedure for selection of a common auction platform. The notice provides inter alia indications on the eligibility requirements.
The Contract Notice for the second common auction platform was published in OJ 2014/S 211-372946 of 1 November 2014, and the full tender documents are available on DG CLIMA's contracts and grants page.
An information note sets out the rules for contacts with economic operators on matters pertaining to the joint procurement procedures.
Two joint procurement agreements between the participating Member States and the Commission are in force, one for the procurement of the common auction platform and the other for the auction monitor. The agreements lay down the modalities for the conduct of these procurement procedures jointly by the Member States and the Commission.
Among other things, they provide that:
- The Commission arranges the overall orientation, preparation and organisation of the joint procurement procedures;
- The Commission is the sole representative towards third parties and provides administrative support in the course of the joint procurements and the resulting contracts;
- The Member States, represented in a Joint Procurement Steering Committee (JPSC), provide steering input. Main decisions, notably the adoption of tender documents and award decisions, require prior approval by the (participating) Member States through qualified majority vote in the JPSC.
- Opt-out Member States may be given observer status in the procurement of the common auction platform(s) if they sign the Joint Procurement Agreement for the sole purpose of being able to make use of the auction platform(s) appointed pursuant to Article 26(1) and (2) of the Auctioning Regulation, in the absence of any listing of their own auction platform(s) in Annex III of the same Regulation.
- The Joint Procurement Agreement foresees a Contract Management Committee consisting of representatives from the Commission and the Member States to manage the contracts with the common auction platform(s) and the single auction monitor.
The procurement procedures themselves are conducted pursuant to the procurement rules in the Financial Regulation, which is the legal basis for procurement procedures carried out by the Commission.
Opt-out auction platforms
After determining the details of its intended auction platform through a procurement procedure, a Member State opting out of the common auction platform(s) notifies its plans, including all relevant details, to the Commission. The Commission verifies that the auction platform satisfies the rules of the Auctioning Regulation and the objectives of the ETS Directive, and to determine whether obligations or conditions could be required for ensuring adequate coordination between the different auction platforms.
If the Commission is satisfied that the opt-out platform respects the rules and can be expected to achieve the objectives of the ETS Directive, it puts forward a draft amendment of the Auctioning Regulation to list the opt-out platform in an Annex to the Regulation. The adoption of this amendment follows the same procedure as the adoption of the Auctioning Regulation itself, including an opinion by the Member States represented in the Climate Change Committee, followed by a three-month scrutiny period for the Council and the European Parliament. The opt-out platform can start conducting auctions only when the amendment to list it has entered into force.
Under this procedure, EEX has been listed twice as Germany’s opt-out auction platform and ICE as the UK’s. Poland has yet to procure and notify its platform and is in the meantime auctioning on the common auction platform.
What happens to the allowances in question, in the absence of the listing of an opt-out auction platform?
In the absence of an opt-out auction platform being listed, the Member State concerned has to auction its share of allowances on the common auction platform, so as to ensure that the envisaged volume of allowances comes to the market as foreseen in the Auctioning Regulation. Pursuant to this rule, Poland has entered into a contract with EEX and EEX started auctioning for Poland as of 16 September 2013.
Can a Member State give preferential treatment to its own industry? How is respect of the principle of non-discrimination ensured?
No, Member States cannot give preferential treatment to their own industry. All auction platforms must give all eligible bidders equal access to auctions and no preference can be given to companies registered in any particular Member State. The provision that any auction platform must be a regulated market helps to ensure that all participants are treated in a fair and non-discriminatory way.