Government invites firms to register carbon auction interest

The government is inviting energy firms, banks and other organisations with experience in commodity trading to apply for a key role in the auctioning of EU carbon allowances (EUAs) under phase II of the blocs emissions trading scheme (ETS).

Defra announced late last week that it is beginning its search for the so-called Primary Participants who can bid directly for the carbon credits at auction on behalf of other firms and traders.

"In order to keep the auctions as simple as possible we are planning to only have a relatively small number of organisations dealing directly with government," explained a spokesman Defra, adding that those firms that are selected as Primary Participants would act as intermediaries, processing bids firms keen to buy EUAs in the four auctions the government will operate each year, filing those bids with government and then procuring the EUAs following a post-auction clearing period.

Any firm with an existing EU ETS registry account can apply to become a Primary Participant, although they will have to meet certain criteria. "We are looking for large companies with some kind of trading arm," said the Defra spokesman. "These companies will have existing skills in the ETS as well as commodity trading skills such as systems to detect money laundering and fraud."

He added that the government was expecting significant interest in the scheme with energy companies and banks the most likely to step forward.

Firms now have until October to register their interest with a final decision on the selected Primary Participants expected soon thereafter. ""We want them in place as quickly as possible ahead of the first full blown auction before the end of the year," he explained, adding that all firms that apply and meet the criteria are likely to be approved.