The UK’s first auction for Phase III allowances of the EU Emissions Trading Scheme took place in London today.

This auction was run by exchange platform ICE Futures Europe, which was appointed in April to host the sale of allowances.

Flags of the EU
The auction sold 6.5 million allowances, with a clearing price of €6.62 ($8.47), raising approximately £34m for the UK Treasury.

During Phase II of the EU ETS, which ends this year, the UK held 30 competitive auctions, selling almost 123 million allowances and raising around £1.3bn. Each allowance represents an entitlement to emit one tonne of carbon dioxide equivalent gas. Phase III will run until 2020.

Emissions trading establishes the price of greenhouse gas emissions, which allows the market to determine the most economically efficient method for businesses to reduce their emissions.

Around 90 per cent of EU carbon trading is now carried out in London. Climate Change Minister Greg Barker said this morning: “The UK is really leading the way in carbon auctioning, and today’s sale reaffirms London’s position as a global hub for the market.

David Peniket, president of ICE Futures Europe, hailed today’s trading as a new milestone in the development of European emissions trading”.

Phase III of the EU ETS is expected to deliver emission reductions of 3100 MtCO2e between next year and 2020.