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Climate Action

Auctioning is the most transparent method for allocating emission allowances and puts into practice the principle that the polluter should pay. Businesses covered by the EU Emissions Trading System (EU ETS) have to buy an increasing proportion of allowances through auctions.

Auctioning is the default method of allocating allowances as of phase 3 of the EU ETS (2013-2020).

The Member States auction their allowances in accordance with the ETS Directive and the Auctioning Regulation. The three EEA-EFTA countries also auction their allowances following the same principles.

From 2021, the UK is no longer part of the EU, however, pursuant to the Protocol of Ireland and Northern Ireland, the EU ETS applies to electricity generation located in Northern Ireland. Therefore, the UK will auction a small volume of allowances corresponding to its share in the Union-wide cap.

The allowances made available to the Innovation Fund and to the Modernisation Fund are auctioned too. Allowances for the stationary installations (general allowances) are auctioned, unless they are allocated for free or placed in the Market Stability Reserve (MSR).

In total, the Commission estimated that 57% of the total amount of general allowances were auctioned in phase 3. In phase 4 (2021-2030), the share of allowances to be auctioned remains the same.

In accordance with the ETS Directive, in the aviation sector, 15% of all issued aviation allowances are auctioned (see FAQ ).

The Member States’ auction shares of general allowances and aviation allowances for phase 4 are published in Commission Decision (EU) 2020/2166 of 17 December 2020.

Auctioning revenues and their use

The total revenues generated by Member States, the UK and EEA countries from the auctions between 2012 and 30 June 2020 exceeded EUR 57 billion.

In 2019 alone, the generated total revenues were above EUR 14 billion, while in the first half of 2020 they reached EUR 7.9 billion.

The ETS Directive provides that Member States should use at least 50% of auctioning revenues or the equivalent in financial value for climate and energy-related purposes. Based on the most recent information available, around 78% of revenues in 2013-2019 were used for climate and energy related purposes.

Member States are requested to report annually on the amounts and use of the revenues generated, under the Regulation on the Governance of the Energy Union and Climate Action. The total figures are annually reported in the Carbon Market Report.

Auctioning rules

The auctioning of allowances is governed by the Auctioning Regulation, adopted in accordance with Article 10(4) of the ETS Directive. It covers the timing, administration and other aspects of auctioning to ensure it is conducted in an open, transparent, harmonised and non-discriminatory manner.

The Auctioning Regulation puts into practice the criteria which the ETS Directive states the auctions must meet, such as predictability, cost-efficiency, fair access to auctions and simultaneous access to relevant information for all operators.

Auction platforms

28 countries (25 EU Member States and 3 EEA/EFTA countries) auction their allowances on the common auction platform. To this end, they have signed a Joint Procurement Agreement.

Currently, the European Energy Exchange (EEX) in Leipzig is the common auction platform.

Germany and Poland have opted-out of the common auctioning platform. Germany has nominated EEX as its opt-out platform, while Poland is making use of the common auction platform (EEX) to auction its allowances until further notice.

Nomination of the common auction platform

The common auction platform is nominated for up to five years by a joint procurement between the Commission and the participating countries, in accordance to the rules laid down by the Joint Procurement Agreement.

For third parties, the Commission is the sole point of contact for information concerning the joint procurement procedures.

The procurement procedures are published on Tender Electronic Daily (e-Ted). Documents on past and ongoing tenders are also accessible via the contracts and grants pages.

Documentation

Auction reports

Please note that the Commission bears no responsibility for the contents of the reports prepared by Germany and the United Kingdom.

Auction shares

Auctioning Regulation and Joint Procurement Agreement

Auctioning Regulation and impact assessment

Joint Procurement Agreement

Transparency, implementation of the Auctioning Regulation by Member States

Use of auction revenues

FAQ

Questions and Answers: Auctioning

Questions and Answers: History of the auctions

Questions and Answers: Auctioning process

Questions and Answers: Auctioning rules

Questions and Answers: Joint procurement of the common auction platform

    Opt-out auction platforms