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No date set for NIMs allocation - Commission

18 Jan 2013 16:34:45 | edcm

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The European Commission told ICIS it still does not know when it will finalise how many free allowances industrial installations will receive in phase III of the EU Emissions Trading System (ETS), which is likely to see industrial companies hold onto their surplus for now, analysts said.

All states falling under the EU ETS must list how many EU allowances (EUAs) each industrial plant within their borders would get free in phase III (see EDEM 3 October 2011. The plans, known as national implementation measures (NIMs), are based on EU-wide benchmarks for industrial sectors. A deadline of September 2011 for members to submit their NIMs was missed by many, with Italy the last to submit, in July.

The Commission is analysing the plans to ensure completeness and compliance with the relevant legal provisions. The European Free Trade Association, a body comprising four countries linked to the EU, is carrying out a similar assessment for its members. The final number is calculated according to EU-wide benchmarks for industrial sectors and sub-sectors. "No date is set yet for the announcement of the final decision," a spokeswoman said.

According to the ETS directive, if preliminary allocation through NIMs exceed the maximum amount of allowances available, the Commission must calculate whether a correction is needed across all the market sectors and from which year. The Commission did not comment on the possibility the requested amount through NIMS exceeds the maximum amount of allowances available.

Market's impact

Carbon analysts think with the Commission still to approve allocations, industrial companies are likely to hold onto their surplus until they know what they will receive.

"Industrials need to know where they stand before they sell their surplus, especially taking into consideration the current state of prices, which are at a record low," an analyst from a European bank said. "If industrials were selling their surplus with such low prices, it would mean that they have completely lost faith in the market. Instead, there is hope that with the back-loading proposal, prices will recover," he added.

Another source added: "Industrials will likely enter the market once they have their free allocations. Regardless of when they receive their allocations, most industrials will chose to sell the future and carry the spot." MM

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