The UK government invited brokers and traders to submit bids for the right to sell surplus carbon-dioxide emissions rights on its behalf.
The extra permits come from a pool of allowances that were held back for new installations started after the European Union emissions-trading system commenced in 2005, the government's Department of Trade & Industry said today in a Regulatory News Service statement. Anyone will be able to buy them. The allowances cover the first phase of the EU trading arrangement that runs until the end of this year. Under the emissions-trading program, installations have a cap on the amount of carbon dioxide they can produce. If they exceed the cap, they must buy additional allowances in the market from other companies that reduce their emissions. A second phase of trading starts in 2008 and runs for five years. The sale of the allowances is intended to take place in March, the government's Department for Environment, Food and Rural Affairs said today on its Web site. That way, permits could be used to help comply with emissions obligations for 2006, or carried over to 2007. The contract to auction or sell the allowances will be awarded on a lowest-cost basis to one or more brokers or traders, the DTI said in its statement. Bids should be returned by midday London time on March 2, the DTI said. A law allowing the sale of the allowances will enter force on March 16, it said.
Amsterdam's European Climate Exchange would be keen to sell the surplus allowances, said Sara Stahl, its head of business development and marketing, today in a phone interview. An exchange has the advantage of being transparent, offers anonymity to participants, and has established trading liquidity, she said. „We know the people and we've talked with them about other things,” Stahl said. The government allowed for 46.8 million tons of emissions allowances to be set aside in its reserve for new entrants, equivalent to 6.3% of the total quantity allocated for free to installations involved in emissions trading, according to its approved national allocation plan. Allowances for immediate delivery were trading at €0.87 ($1.14) a metric ton The Hungarian government on December 11 hosted an auction for carbon emission allowances that produced a price of €7.42 a ton, 9%above the market price at that time.today, according to prices on the Powernext exchange in Paris. The Hungarian government on December 11 hosted an auction for carbon emission allowances that produced a price of €7.42 a ton, 9%above the market price at that time. (Bloomberg)