EU Member States today (13 July 2011) agreed to the European Commission's proposal to auction 120 million emission allowances for phase 3 of the Emissions Trading System in 2012, the year before phase 3 starts.
Meeting in the EU Climate Change Committee (CCC), Member States also made substantial progress towards finalising two draft Agreements concerning procurement procedures for the single auction monitor and the common auction platform.
Today's outcome puts the Commission and the Member States on track to start these auctions in the second half of 2012.
The holding of auctions ahead of the start of phase 3 - so-called "early auctions" - is foreseen in the revised Emissions Trading Directive adopted in 2009. Early auctions are appropriate in view of the widespread commercial practice in the electricity sector of selling power on a forward basis and purchasing the required inputs (including carbon allowances) when they sell their output.
The volume of early auctions is determined by an amendment to the EU ETS Auctioning Regulation. The draft amendment approved by the CCC today also provides for a number of other technical changes to the Auctioning Regulation. Early auctions will be in the form of spot contracts (i.e. delivery of allowances no later than 5 days after the auction), also when auctioning on a transitional auction platform. Transitional auction platforms are exempt from some of the provisions of the Auctioning Regulation and therefore the procurement of such a platform facilitates a timely start of the auctions.
The Commission will now submit the agreed text to the Council and the European Parliament for scrutiny. Providing no objections are received within three months, the Commission will adopt the proposed amendment.
The two Joint Procurement Agreements set out how Member States and the Commission will jointly conduct procurement procedures in view of the appointment of the common auction platform that will be used by 24 Member States and the single auction monitor that will monitor the auctions conducted on all auction platforms. The Commission is confident that discussions will be concluded swiftly and both Agreements will be formally endorsed by the CCC in September.
Signature of the Joint Procurement Agreements, their entry into force and approval of the tender specifications by the Member States will take some further time. The Joint Procurement Agreements will pave the way for the preparation of the tender specifications for the procurement of the single auction monitor and the common auction platform between the Commission and the Member States.
The Commission aims to launch the tenders together with Member States around the turn of the year. Further information in this regard will be made public in due course.