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ICIS plots key dates for the carbon market in 2013

31 Dec 2012 11:26:30 | edcm


With 2013 the year the carbon market kicks off for its third trading phase, ICIS outlines the key events to look out for in the next 12 months.


• Phase III of the EU emissions trading system (ETS) starts.

• From January, 541.2m European Union Allowances (EUAs) will be auctioned on the European Energy Exchange (EEX) for the 24 member states, plus Poland, Iceland, Liechtenstein and Norway with weekly auctions on Mondays, Tuesdays and Thursdays. 182.6m EUAs will be auctioned on EEX for Germany on Fridays; 95.10m EUAs auctioned on ICE for the UK in fortnightly auctions on Wednesdays.

The final volume and auction calendar dates are subject to approval by the EU as decisions are still pending on leftover EUAs from the phase II new entrant reserve (NER) and final phase III volumes.

• Second commitment period of the Kyoto Protocol starts.

• As of 1 January, only certified emission reductions (CERs) issued by projects based in less-developed countries, or registered before the end of phase II, will be allowed in the ETS.


• The allocation of free allowances to operators in countries falling under the derogation in phase III will take place. A handful of select member states are eligible to be exempt from auctioning under the derogation - Bulgaria, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland and Romania.


• Verification of operators' reported emissions.

• The UK will vote on its carbon budget.


• Companies in the EU ETS have to surrender allowances matching their 2011 emissions by 30 April. This includes the first surrender of allowances by European airlines that are still included in the EU ETS.


• Final checks of operators' allowance surrender.

• The EU will ban grey CERs - which originate from projects breaking down greenhouse gases emitted by the chemical industry from May 2013, because they create an incentive to keep producing the gases in question. Green CERs will still be allowed and can be used at any point during phase III (2013-2020) of the EU ETS.


• The International Civil Aviation Organization autumn meeting will take place, at which a global deal on cutting aviation emissions is to be presented. The EU has warned that if the UN body fails to deliver it will lift its suspension of international airlines from the EU ETS, meaning that these airlines would once again join European airlines in paying for their carbon pollution.


• The UN's 19th conference on climate change will take place in Poznan, Poland, despite the country's continued opposition to greening the EU's environmental policy and raising the ambition of its carbon market.


• 2013 Benchmark contracts expire

Unconfirmed dates

• In total, 818.86m EUAs will be sold by EU member states on the ICE and EEX platforms over the course of 2013.

Due to the lengthy legal process that the back-loading proposal has to undergo, analysts have suggested that − at the very soonest − it could be adopted in the second quarter of 2013.

Germany in particular has to come to a coherent position on the back-loading proposal, if it is to pass.

If the proposal is not ratified by June then recess will delay implementation to the fourth quarter at the earliest. If adopted it would help ease the pressure on bearish carbon prices, which have shed value rapidly over the course of phase II, as the glut of allowances has steadily grown amid a recession-driven drop in emissions.

• The Climate Change Committee (CCC) will have to vote on the proposed change in rules around emission reduction units (ERUs). The market is expected to hold off buying more ERUs as long as the uncertainty persists, given that they could not be sure they would be able to use them for compliance beyond 2013. No date has yet been set for this decisive CCC vote.

• The EU has to come to an agreement over the question of surplus Kyoto credits, after the 2012 Doha summit only made limited progress on the matter of surplus assigned amount units (AAUs). A limit on purchasing AAUs from the first Kyoto commitment period will apply, but the surplus will not be cancelled altogether.

Only a handful of negotiating parties - the EU, Australia, Japan, Liechtenstein, Monaco, New Zealand, Norway and Switzerland - have agreed not to buy AAUs from the first period, while environmental groups have called on the EU to step up the scale of international ambition on the issue.

• The EU has to publish final figures for member states' confirmed National Implementation Measures, which will inform industrials of how many free allowances they can expect to receive in phase III. Depending on the numbers, the data could trigger a large-scale sell off of surplus allowances by cash-strapped industrials.

• The EU and other negotiating parties have to adopt a 2013 work plan and actions to potentially increase the ambition of 2020 reduction targets. MLDB

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