Latest UK carbon auction raises over €56m

The UK government yesterday completed its fourth auction of carbon credits as part of the EU emissions trading scheme, again raising over €50m for the Treasury.

The Debt Management Office confirmed that 4.2 million EU allowances (EUAs) were successfully sold with the clearing price for the auction set at €13.38.

Under the terms of the auction, competitive bids made at prices above the clearing price are allotted in full to the successful bidder, while all bids accepted at the clearing price were allotted approximately 88.6 per cent of the amount bid for.

All but a handful of the bids were competitive, meaning the government raised a minimum of €56.2m through the auction.

Stig Schjolset of analyst firm Point Carbon said the clearing price was largely in line with expectations. "The previous auctions closed at a price just below the spot price, and we saw that again yesterday," he said.

The price of EUAs hit a 30-day high of €14 earlier today as the market resisted the impact of this week's drop in oil prices.

Schjolset said the market was showing signs of stability after prices fell earlier in the year as a result of falling industrial output and reduced demand for EUAs from carbon-intensive industries.

"Prices fell as a result of the recession, but they have stabilised around the €13 mark for quite a long period now," he said. "Even though demand for EUAs to cover firms' carbon emissions is down, long-term expectations that prices will recover are propping up the market."