Emissions trading: EEX holds 500th German auction of emission allowances

Auctions established as a cornerstone of the European Emissions Trading System

Hands in front of a laptop screen showing a trading picture.Click to enlarge
Today, nearly 90 percent of the Europe-wide auction volume are settled through EEX.
Source: Pressmaster / Shutterstock

Since 5th January 2010, EEX has auctioned more than 900 million emission allowances on behalf of the Federal Republic of Germany. Including today’s 500th auction, revenue of in total approximately EUR 6 billion has been generated. These funds have been used almost completely for financing national and international climate protection measures.

The significant expansion of auctioning of emission allowances instead of the almost complete free allocation is one of the central steps forward which have been implemented in the European Emissions Trading System (EU ETS) for the current third trading period. “The allocation via auctions complies with the polluter-pays principle most consistently and, in this way, creates the biggest possible incentives for climate protection measures in companies. And by making use of existing infrastructures, the auction procedure entails very low costs for all players involved.”, explains Dr Michael Angrick, head of the German Emissions Trading Authority (DEHSt) at the Federal Environment Agency (UBA). In Germany, UBA is the competent authority in charge of the implementation of the EU ETS. Thus it is also responsible for managing the German auctions.

“The execution of auctions at transparent exchange market platforms such as EEX safeguards a level playing field for all participants. Today, nearly 90 percent of the Europe-wide auction volume are settled through EEX. In this process, a professional co-operation among all players involved at a national and at a European level forms an essential factor guaranteeing the successful implementation of the auction”, underlines Peter Reitz, Chief Executive Officer of European Energy Exchange (EEX), headquartered in Leipzig. Following public tendering procedures, EEX was selected as the German auction platform and has carried out the auctions for almost eight years now.

So far, the expectations regarding the auction procedure have been completely fulfilled. Overall, the auctions have been carried out almost completely in line with the development of the entire market: Price deviations between primary market auctions and the secondary market were mainly in the tenths of a percent range.

For Germany, launching regular auctions of emission allowances as early as during the second trading period has proved successful. As a result, important experience could be gathered for the third trading period. With only a few exceptions all important design elements of the former German auction procedures are now reflected in the harmonised European framework of the EU Auctioning Regulation.

Further information:

Detailed information on the German auctions of emission allowances is provided in the monthly auction reports of DEHSt. In addition to the detailed evaluation of the German auction results, these also include a comprehensive overview of the developments on the secondary market: https://www.dehst.de/EN/understanding-emissions-trading/auctioning/reports/reports-node.html;jsessionid=03355946CA70DFFADBF18125675C4920.1_cid331

Detailed information on all aspects of auctioning emission allowances for currently 27 countries is also available on the EEX website at: https://www.eex.com/en/products/environmental-markets/emissions-auctions/overview

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 EEX  Emission Trading