The UK Government intends to hold its second auction in Phase II of the European Union's Emissions Trading System on 24 March 2009.
The auction will comprise a competitive bidding facility only. The bidding window will open from 8am and close at 10am on 24 March 2009. The EU ETS sets a cap on the total emissions from the main industrial sectors across Europe, covering more than 10,000 installations in the energy and industrial sectors. Each installation has to purchase allowances for every tonne of carbon they emit.
Government claims auctioning these allowances marks a step forward in developing a system where market forces create financial incentives for major carbon emitters to reduce their emissions. This, it says, will help stimulate the development of green technology.
The number of allowances to be auctioned will be announced at least one month before the date of the auction. In 2009 the UK plans to auction a total of 25 million allowances.
Participants in the auction can place bids through intermediaries, called primary participants The application window for organisations to become primary participants has also re-opened and is expected to remain open for the remainder of Phase II.
Application forms to become a primary participant and any supporting documentation should be received by The Department of Energy and Climate Change at least one calendar month before any auction date for an institution to be permitted to participate directly in that auction. This is said to allow sufficient time for the Department to process and assess the application and leave a period of time for the primary participant to establish relationships with indirect bidders. The UK Government will charge VAT on EU allowances auctioned in the UK.