Significant reduction in auction volume from today
The number of EU ETS allowances to be auctioned in 2014 has been reduced by a total of 400 million. Today, the first auction affected by the reduction was held on the corresponding EU auction platform. Auctions for Germany will be conducted at the European Energy Exchange (EEX) with a reduced volume of allowances from next Friday (21 March).
The delayed auctioning, or back-loading of allowances, has thus already begun in the first quarter of 2014. The auction volume will be cut by 400 million allowances this year, by 300 million next year, and by 200 million in 2016. The German auction volume for 2014 has been reduced from 205 million to around 127.1 million allowances.
"Starting to fix the EU ETS now sends a powerful signal to the market. But we also urgently need to tackle long-term reform," said Federal Environment Minister Barbara Hendricks. She renewed her call to implement the market stability reserve proposed by the European Commission before 2020, explaining: "Back-loading in its current form will only have a very limited impact as it is not a long-term strategy. Limiting our action to this measure would jeopardise our climate goals and continue to obstruct the transformation of Germany’s energy system".
According to the amendment to the EU’s Auctioning Regulation implementing back-loading, a total of 900 million allowances due to enter the market between 2014 and 2016 will be held back until 2019-2020. This measure is a short-term reaction to the enormous surplus of allowances accumulated by the end of 2012, largely as a result of the economic and financial crisis, but also of the vast use of international credits. Whereas most Member States sell their allowances on the common EU auction platform, Germany exercised its right to set up a national platform.