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Angela Eagle announces date for first emissions trading auction
The Exchequer Secretary to the Treasury, Angela Eagle MP, today announced that the UK's first auction of carbon trading allowances - under the EU Emissions Trading System (EU ETS) - will be held on the 19 November, 2008, making the UK the first country in Europe to hold an auction in Phase II of the EU ETS.
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. The UK is one of the Member States going furthest on auctioning in Phase II, within the limits set by the EU Directive.
Angela Eagle said:
"The UK is leading the way across Europe in efforts to cut carbon emissions and ensure companies work now to put in place the long term solutions to tackle climate change. Auctioning carbon allowances will create greater incentives for companies to reduce emissions and provide stability and transparency in this emerging market."
The Treasury has appointed Defra to conduct the auctions, and Defra has appointed the UK Debt Management Office (DMO) to act as its agent in running the auctions in Phase II. Environment Minister, Phil Woolas said: "The UK is at the forefront of the fight against climate change and putting in place tools which mean that what's good for the environment is also good for business. Auctioning these allowances marks an important step forward in developing a system where market forces create financial incentives for major carbon emitters to reduce their emissions. This will help stimulate the development of green technology and British business can begin to realise the benefits of being leaders of the low carbon revolution."
Notes for Editors
1. The ETS currently covers more than 10,000 installations in the energy and heavy industrial sectors. These sectors are collectively responsible for close to half of the EU's emissions of Carbon Dioxide.
2. Emission allowances, each representing the right to emit 1 tonne of carbon dioxide, are issued to operators in the scheme and the limit is set by issuing a fixed number of allowances for each trading period. Phase I was the first trading period and covered 2005-2007. During this period, almost all allowances were allocated to participants for free. Phase II runs from 2008-2012, covering the first commitment period of the Kyoto protocol. In Phase II, the EU Directive sets a limit on the maximum amount of allowances that can be auctioned of 10%.
3. The UK National Allocation Plan for the second Phase of trading in the EU ETS (2008-2012) sets aside 7% of the allowance cap for auctioning, amounting to approximately 85 million allowances over the phase. As set out in the UK's Vision Statement on Emissions Trading, published in 2006, the Government supports the use of auctioning to allocate allowances, as it is the most transparent and open way to allocate the allowances. This will improve the efficiency of the EU ETS as allowances go to those who value them the most.
4. The secondary legislation governing auctions was introduced by the Government earlier in 2008, and can be found at:
5. Further information on the Phase II of EU ETS in UK can be found in DEFRA and DMO websites:
* http://www.defra.gov.uk/environment/climatechange/trading/eu/index.htm
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