Sixth and last Commission update on 2018 free allocations

This is a condensed version of our analysis for ICIS EU carbon subscribers that was originally published on 22 May at 11:25 CET.

On Friday, 18 May 2018, the European Commission published the 6th update on 2018 free allocation.

Main points

• Status table on free allocation to industry and heat production for 2018 as of 18 May 2018 (link)
  • Last update 4 May 2018
  • May 22 update was the last update for 2018 free allocations

Analysis

• According to the latest update:
  • Distributed volumes: 90.1% or 681.6m EUAs of total NATs allocation volumes (756.6m)
    • compared to 90% in the last update (4 May 2018)
    • compared to 93.8% in the 6th free allocation update in 2017  (12 May 2017)
  • Open volumes: 9.9% or 75m EUAs
    • compared to 10% or 75.5m EUAs in the last update (4 May 2018)
• There are no noticeable developments from the last update
  • Germany distributed a further 330k EUAs and Finland 100k
• At this point, the 5 EU member states (Germany, France, Italy, UK, Spain) with the highest NAT volumes have all distributed around 90% or more of their NAT volumes except UK (82%)
• The process is slower compared to last year – at the same time last year only 46.3m EUAs had not been allocated, while this year still 75m EUAs are open
• The pending 75m allowances could still be distributed – however, it is also possible that member states do not hand out these volumes due to lower production levels or cessations
• The 2018 allocation process has thus been completed
• In 2017, according to our database, the allocation distribution progressed as follows:
  • First update, 3 March 2017: 70% of NAT allocated
  • Second update, 17 March: 72.5%
  • Third update, 31 March: 85.5%
  • Fourth update, 12 April: 86%
  • Fifth update, 28 April: 92.5%
  • Sixth update, 12 May: 93.8%

Yann Andreassen is Senior Analyst – EU Carbon & Power Markets at ICIS. He can be reached at Yann.Andreassen@icis.com

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