European Emission Trading Scheme (ETS) Phase III

ICF managed a consultation process on behalf of the European Commission (DG Environment) to assess a variety of stakeholders' views on the appropriate design and process for the auction of European Union Allowances (EUAs) and European Union Aviation Allowances (EUAAs) under the European Union Emissions Trading Scheme (EU ETS).

The revision of the EU ETS Directive agreed in December 2008 will mean that a substantial number of EUAs will be auctioned with respect to the third and later trading periods, rather than being allocated for free to industrial emitters. The mode of auctioning will be important for emitters and more generally for participants in the secondary market for EUAs. In fact, an effective and efficient auctioning system is crucial for the smooth functioning of the ETS itself.

Information and perspectives from stakeholders in the process, including Member States, emitters, carbon commodity traders, financial institutions and market operators, can support the development of such an auctioning system. With DG Environment, ICF developed and published a comprehensive consultation paper and then hosted consultation using an 84-question web-based questionnaire. The consultation was open for a two-month period ending August 3, 2009, following publication of a consultation paper and the list of questions on which views were sought. Responses were received via an online survey or through completion and email of a text document. An opportunity was also provided for additional information to be submitted beyond the direct response to the consultation paper, although the additional views could not be used in the statistical assessment of respondents’ views on the specific questions in the consultation document. One hundred and thirty six responses were received on the specific questions raised in the consultation paper.

The results were discussed in a stakeholder meeting in Brussels in September 2009 attended by Member State governments, key industry organisations, large emitters and financial intermediaries. This important work has assisted the EC in defining an approach to auctioning allowances that is likely to provide the best compromise possible between competing stakeholder views.

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