Auctioning experience in Phase II The example of Germany

Transcription

1 Auctioning experience in Phase II The example of Germany Workshop Implementation of the EU ETS Zagreb September 2010 Meike Söker Division Emissions Trading Federal Ministry for the Environment, Nature Conservation and Nuclear Safety Germany

2 Auctioning amount in Germany in Phase II 40 million EUA per year (about 9% of the total) to be sold/auctioned + about 1 million for refinancing ETS administration Germany auctions more than 50% of the overall amount auctioned in the EU ETS in Phase II Niederlande 5,1% Norwegen 9,0% Ungarn 3,8% Irland 0,8% Österreich 0,6% UK 24,3% BRD 56,5% EU ETS German auctioning experience 2

3 First 2 years: EUAs were sold 2008 and 2009: Sales at exchanges (and few OTC) by KfW banking group on a daily basis (2008: only futures, 2009 both products) Positive feedback: use of existing market structures is market-friendly transparent cost-effective Results: Year Average price Revenues Deviation from market price ,33 million 0.00 % ,49 million 0.11 % Ticket size: 44% of individual transactions up to 5,000 EUAs EU ETS German auctioning experience 3

4 Auctioning from 2010 Auctioning concept built on positive experience of sales Auctioning ordinance with general rules in force July 2009 Concept: Simple and transparent design (single round uniform price auction as usual in the market) Cost efficient approach, using existing institutions, competition provides for low costs for both government and companies Frequent auctions correspond to the needs of companies and the market Open and non-discriminatory access, directly as well as supplied by intermediaries Information and periodical reports for transparency EU ETS German auctioning experience 4

5 Institutional framework Procurement process was initiated end of August 2009 Only exchanges with a functioning secondary market for EUAs could participate EEX Leipzig won the tender process among the relevant exchanges and started auctioning in January 2010 Existing secondary market supervision and EEX market surveillance to prevent manipulative behavior German Emissions Trading Authority with administrative duties KfW banking group was contracted as vendor EU ETS German auctioning experience 5

6 Spot auctioning only? Pros: Participation of SME is easier in spot auctions Also for governments, futures auctioning tends to be more complicated (e.g. margining) Secondary market will provide for suitable contracts (convert spot to futures) Risk of drying-out the secondary market by auctioning lots of futures Futures are locked-in at one exchange possible market distortion Cons: Futures meet needs of demand side as they reduce financing cost Especially relevant for power sector Attractive for governments with good refinancing conditions Compromise in Phase II: both spot and futures auctioning EU ETS German auctioning experience 6

7 Auctioning from 1 January 2010 Auctioning on a weekly basis Spot: 300,000 every Tuesday 11:00h Futures: 570,000 every Wednesday 15:00h From November each year: spot only ( every week) Access direct (membership at exchange) or indirect (via intermediary) Minimum bid size: spot 500, futures 1000 Daily reports by the exchange, periodical reports by the German Emissions Trading Authority (DEHSt) EU ETS German auctioning experience 7

8 Results of German auctions (I) Overview first half of 2010 Quarter Contract Dates Total Amount of Bids (million) Auction Volume (million) Cover Ratio Auction Clearing Price Revenue (million) I (Jan-Mar) Spot Future ,5 43,9 3,9 7, * 5.92 * * * 50,4 96,7 1. quarter 26 65,4 11, * ** 147,1 II (Apr-Jun) Spot Future ,7 44,1 3,9 7, * 5.96 * * * 58,0 111,9 2. quarter 26 66,8 11, * ** 169,9 First half 2010 (Jan-Jun) ,2 22, ** ** 317,0 * Period average ** Volume-weighted average value EU ETS German auctioning experience 8

9 Results of German auctions (II) Deviation from the Secondary Market Price (2. quarter 2010) Spot market Trading price BlueNext (spot) Clearing price auction (spot) April May June July EU ETS German auctioning experience 9

10 Results of German auctions (III) Deviation from the Secondary Market Price (2. quarter 2010) Futures market ECX Emissions Index (Dec 2010 future) Clearing price auction (futures) April May June July EU ETS German auctioning experience 10

11 Results of German auctions (IV) Successful start of auctioning Coverage nearly 6 times, slightly higher participation in futures auctions Bidders confidential, mainly from energy and financial sector Only minimal or no deviations from secondary market prices Transparency and closeness to secondary market important Limited difference between spot and futures auction prices Similar results in both quarters (see reports: So far no irregularities, especially no behaviour of bidders aiming at manipulating the auction price could be detected EU ETS German auctioning experience 11

12 Auctioning in Phase II what can we learn? Using existing exchanges, infrastructure and auction design is cost efficient, safe and easy to cope with for both participants and government Exchange-based approach is efficient way forward German tender showed: Several exchanges of high quality in the market Auctioning in the EU ETS should be allowed at more than one market place to strengthen competition among exchanges Well coordinated auction processes lead to market prices and keep the whole auctioning process less vulnerable Transparency, coordination and open access are key CO 2 market still maturing, diversity leads to suitable products and services Germany will continue to contract an auction platform in Phase III based on harmonised rules laid down in the EU Auctioning Regulation and on periodical tenders to develop auctioning further EU ETS German auctioning experience 12

13 Thank you for your attention Meike Söker Division Emissions Trading Federal Ministry for the Environment, Nature Conservation and Nuclear Safety