UK to renew opt-out of common EU carbon auction platform

Published 16:55 on February 8, 2016  /  Last updated at 19:04 on February 8, 2016  /  EMEA, EU ETS  /  No Comments

The UK has decided to retain its opt-out from the EU ETS common auction platform following the expiry of the government’s current contract with exchange operator ICE, which ends in Nov. 2017.

The UK has decided to retain its opt-out from the EU ETS common auction platform following the expiry of the government’s current contract with exchange operator ICE, which ends in Nov. 2017.

The UK’s Department of Energy and Climate Change (DECC) last week published a ‘Prior Information Notice’ to launch the first stage of a procurement process, with view to signing a contract with an auction platform provider for an initial three years from late 2017, with an option to extend it by a further two.

DECC noted that any bidders should be mindful of the changing regulatory landscape for EUA and EUAA auctions, which will likely be affected by factors including the Market Abuse Directive and MiFID II.

In addition, it highlighted that the number of allowances to be sold in the future will likely be influenced by the MSR and upcoming revisions to the EU ETS Directive for the scheme’s fourth trading phase (2021-2030).

“Potential bidders should note that a review of the [EU’s] Auctioning Regulation is due to take place during 2016 and that there could be changes to the requirements set out in the regulation,” it said.

“Final decisions on the scope of the tender have therefore not yet been taken owing to potential changes to the Auctioning Regulation. In the interim, the current requirements of the Auctioning Regulation will need to be followed.”

Eligible platforms must be regulated by the appropriate financial authorities and be connected to at least one clearing or settlement system.

The UK government added that the contractor may also need to assist in the development and implementation of a mechanism for auctioning aviation allowances relating to a potential agreement by 2020 of an international market-based measure to curb the sector’s emissions.

DECC will hold an engagement day for interested parties on Mar. 10, and anticipates publishing the tender document the week of Apr. 4 to launch the bidding process, which is expected to run until May.

ICE, the main marketplace for EU emissions trading, won the UK’s previous tender for an auction platform for the ETS’ Phase 3, and by the end of this year will have helped the government sell nearly 350 million allowances since late 2012.

By Mike Szabo – mike@carbon-pulse.com

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