Dr. Regina Betz Workshop Auctioning GHG permits in Australia AGSM, 29th of November 2007

Transcription

1 EU ETS auctions Dr. Regina Betz Workshop ing GHG permits in Australia AGSM, 29th of November 27 Content EU ETS and role of auctioning: the directive Lessons learnt from auctioning in the first phase Ireland Hungary Prospects of auctioning in second phase Conclusions 2

2 ing in the EU ETS Directive First phase (25-27): up to 5 % of total allocation Second phase (28-212): up to 1% of total allocation Third phase (212-?):?? EU ETS PHASE 1 4 Member States commit to auctioning for allocation Denmark: 5% of budget (no auction so far) Hungary: 2.5% of budget Lithuania: 1.5% of budget (no auction so far) Ireland:.75% of budget + rest of New Entrant Reserve = 1.8% A total of Million EUAs were proposed but only Million were actually auctioned More EU Member States committed to auction rest of New Entrant Reserve Only Ireland conducted auction 4

3 Irish budget: 1.2 Million t CO2 Two auctions to spread risk 1st auction (25 kt), 2nd (963 kt) Aim: Fund administrative costs, minimise transaction costs minimise strategic behaviour, maximise participation Sealed bid uniform price auction with a non-disclosed reserve price, demand schedule with up to 5 mutually exclusive bids Lot size of 5 EUAs to attract small emitters Pre-qualification requirements valid Registry a/c 3 deposit 5 Lessons from Irish s worked well (15 valid bids): 5 winners clearing price of 26.3 EUA Practical lessons (changed for 2nd auction) 5 day settlement-period too long: better 2 days Deposit of 3 too low: better 15 Lot size 5 EUAs too low: better 1, EUAs Manual prequalification and bidding was replaced by on-line process 6

4 Hungarian s budget: 2.37 Million EUAs Two auctions (December 26 and March 27) Short notice (2 weeks) Electronic uniform price auction via euets.com Reserve price unsealed in first auction: forward price for the day minus.9 EUA Lot size: 1, EUA Deposit two working days before 7 Results from Hungarian s First auction ( ) Million EUAs sold Clearing price 7.42 per EUA,.42 to.57 above price on secondary market Second auction ( ) Million EUAs sold Clearing price.88 per EUA 8

5 Lessons from Hungarian auctions Selling earlier gives higher revenue since price has dropped Shorter bidding phase (1 h) to limit exposure to shifts on secondary market Don t announce reserve price Lower transaction costs to increase participation More transparency Suggestion: twice a week sale at ECX instead of auction (too little volume, Hungarian supply = 1.5 days volume) Phase I Phase II budget in Million EUAs p.a. share proposed share actual budget proposed budget actual share (%) budget Austria.%.% 1.22%.4 Belgium (Flanders).%.%.3%.18 Denmark 5.%.% 1.68.% Hungary 2.5% 2.5% % 1.49 Germany.%.% 9.% 4. Ireland.75%+NER 1.81% %.11 Italy.%.% 5.7% 12. Lithuania 1.5%.% %.46 Luxembourg.%.% (5.%). Netherlands.%.% 4.% 3.7 Poland.%.% 1.% 2.64 UK.%.% 7.% EU 27.19%.12% %

6 Germany 28/29: selling of allowances into the market Same practice as with New Entrant Reserve (NER) KfW is buying allowances on the market to refill the NER KfW Bankengruppe will also be selling allowances in the first 2 years : auctioning allowances No details available so far Regulation to be passed in 28/29 Coordination between Member States is likely Conclusions Insignificant share (.12%) of auctioning in first phase Practical lessons from Irish and Hungarian auction: Short settlement-timing deposit (either too low to create financial incentives or too high which reduced small participants: proportional deposit to bidding) Share of about 4% auctioning in second phase, will play minor role Significant windfall profits will prevail in second phase (only power sector 29 billion p.a., Matthes and Neuhoff 27) Some countries like Germany might sell into the market in the initial years rather than auction details are not decided in EU countries for second phase, harmonisation likely likely to play more dominant role in third phase 12

7 Many of our publications are available at: 13