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Germany and Italy raise most revenues from EEX carbon auctions

17 May 2013 20:48:00 | edcm

Germany and Italy raised more cash than any other EU member state from auctioning phase III EU carbon emissions allowances (EUAs) between November 2012 and February, according to reports published on Friday by the European Commission.

As host of the EU's transitional common auction platform, Germany-based EEX sold 137.9m phase III EUAs on behalf of 23 EU member states during the period, raising €760.7m in 35 auctions. Italy received the largest share at €139m (18% of the total), followed by Spain with €134m (17%).

Italy will use part of the revenues to compensate those new entrants in phase II of the EU Emission Trading System (ETS) that missed out on free EUAs after the dedicated reserve ran dry, according to a regulation passed this year (see EDCM 8 April 2013). EU rules state that member states must use at least half of the revenues from the auctioning for measures to fight climate change.

Separately, EEX also carries out auctions on behalf of Germany, which raised €249m from its phase III auctions during the period.

The UK, which has also opted out of the common auction platform, uses London-based ICE Futures Europe for its EUA sales, while Poland, the third EU member to opt out, said it will use EEX until it appoints its own auction platform.

The commission's report said it is unclear when Poland will join the EEX platform. It said: "Poland and EEX are currently preparing to hold such auctions on the transitional common auction platform; the start date remains to be determined."

Market analysts have previously said the fact that the Warsaw stock exchange has hosted an auction of Polish phase II EUAs might indicate that the platform is becoming the front-runner to host the country's phase III sales (see EDCM 13 March 2013).

Banks and investments firms

The commission's data also shows that most of the volume on auction via the common platform is bought by investment firms and credit institutions rather than operators.

Although the mix of successful buyers at the common-platform auctions has changed, the share of ETS operators consistently failed to rise above 40% in any single month during the November-February reporting period.

At the end of February, the number of eligible bidders stood at 45.

The auctions' weighted average clearing price during the reporting period was €5.52/tCO2e, less than carbon's average close of €5.98/tCO2e in the period, according to data collected by ICIS.

The EEX said that, for all but nine of the auctions, the clearing prices were "equal to or between" the best bid and offer prices on the secondary market and "in line with" those at "other trading venues" and auctions. Silvia Molteni

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