(Adds quotes, writes through)
By Michael Szabo
LONDON, Nov 19 (Reuters) - The British government sold 4
million permits in the country's first auction of European Union
carbon emissions allowances but held that revenues would not
necessarily be used to fight climate change.
The permits, called EU Allowances (EUAs), were sold on
Wednesday to industry at 16.15 euros a tonne, raising 64.6
million euros ($81.55 million) for the British Treasury.
Under the EU's Emissions Trading Scheme, companies receive a
set quota of permits to emit greenhouse gases which they can
trade with other participants, thus putting a price on
polluting.
This is the first EUA auction in the scheme's second phase,
which runs from 2008-2012, and was open to participants
globally.
"Today's first Phase 2 auction demonstrates continued UK
leadership in reducing carbon emissions as part of the fight
against dangerous climate change," the UK's Energy and Climate
Change Minister of State Mike O'Brien said in a statement.
Britain's Department of Energy and Climate Change plans to
auction a further 25 million EUAs next year.
It has said that revenues will not be earmarked specifically
to develop renewable energy or fight climate change, as some
environmentalists demand.
The Austrian government will auction some 400,000 EUAs next
month, while the Netherlands told Reuters it will hold a similar
auction next year.
The UK Debt Management Office, which oversaw Wednesday's
sale, would not confirm the identity of the winning bidders but
said the auction was more than four times oversubscribed.
Benchmark EUAs were trading 10 cents higher at 16.65 euros a
tonne at midday on Wednesday, recovering from a fresh 20-month
low hit earlier in the day.
MORE AUCTIONING
The European Commission allows governments to auction up to
10 percent of the allowances issued in the second phase, to
allow industry to prepare for Phase 3 (2013-2020) when EUAs will
no longer be issued for free to many participants.
"We want more auctioning in the future - and are already
planning to auction 100 percent of the allowances needed by the
power sector from 2013," O'Brien added.
Consumers have been paying more as utilities have added to
power prices the cost of the carbon permits many of them get for
free, resulting in windfall profits.
"Auctioning is seen as a way of killing windfall profits,
particularly in the electricity sector," said Andreas
Arvanitakis of carbon market analysts Point Carbon.
Others, however, argue that full auctioning gives money to
the wrong people, thereby curbing corporate investment in
cutting emissions.
"A company that is unable to reduce emissions will now
purchase additional EUAs from the Government and that money will
no longer find its way to the companies with low cost emission
abatement opportunities, but instead be siphoned out of the
system by the Treasury," said James Emanuel of CantorCO2e.
"Auctioning undermines (the system) as it takes money away
from those who can do something about climate change, the
emitters, and gives it to those who can't, the politicians."
European Commission proposals to see full auctioning
introduced from 2013 are currently being weighed in the EU
parliament, with a vote expected in December.
(Additional reporting by Nina Chestney; Editing by Anthony
Barker)
- 
- 
- 
Welcome,
Guest!
News
