Government announces carbon auction schedule

Following the success of its first auction of EU carbon credits, the government has today announced dates for nine further auctions up to April 2010, including the number of EU allowances (EUAs) it plans to sell at each auction.

In a statement the Department of Energy and Climate Change (DECC) confirmed that the second auction will take place on the morning of 24 March with four million EUAs up for grabs.

The government plans to auction a total of 25m allowances in 2009 with tranches of 4.2 million EUAs to be made available at auctions in June, July, September, October and November.

The first auction was completed last November and was widely regarded a success with four million EUAs sold at €16.15, raising £54m for the treasury.

Firms interested in buying credits at the forthcoming auctions will be able to place bids through intermediaries, known as primary participants.

Currently, Barclays Capital, JP Morgan, BNP Paribas and Morgan Stanley have been approved to act as primary participants by DECC. Although the department has said it is in talks with other financial institutions and more companies are likely to be approved as primary participants in the future.

In less encouraging news for the EU's emissions trading scheme (ETS), the recent rally in the price of EUAs faltered last week with the price still below the €10 mark.

The fall in prices was prompted by continuing concerns about reduced levels of industrial production – in turn leading to reduced demand for EUAs – which were backed up by figures showing EU steel production fell 45.9 per cent in January compared to the previous year.