Emission allowances auction

The European Emissions Trading System (EU ETS) lets organisations obtain emission allowances to offset their emissions in two ways: through free allocation and through auctions. Auctions are a transparent way of allocating emission allowances and are in line with the principle that the polluter pays for CO2 emissions. Most of the emission allowances will therefore come to the market through auctions. In the fourth trading period (2021–2030), around 57% of allowances are expected to be auctioned.

While businesses obtain some of their allowances for free through allocation, they also have to buy some at auction to offset all their emissions. Auctioning of emission allowances takes place on the basis of the Auctioning Regulation (Regulation [EU] 1031/2010). It stipulates that each Member State must appoint an auctioneer. In the Netherlands, this is the Dutch Emissions Authority (NEa). The NEa monitors the course and financial settlement of the auctions and draws up an annual auction monitor.

The Dutch emission allowances are auctioned on the auction platform European Energy Exchange (EEX). Both general emission allowances (European Union Allowances, EUAs) and aviation emission allowances (EU Aviation Allowances, AEUAs) are auctioned on this platform. 25 EU Member States, including the Netherlands, and three EEA/EFTA countries auction their emission allowances three times a week in a common auction on EEX. Germany and Poland auction their allowances on the same auction platform through a separate auction. In practice, it makes no difference on whose behalf the emission allowances are auctioned. The auctioned allowances can therefore be purchased, traded and surrendered by organisations from all Member States.

The auction is open to all organisations that meet the requirements of the auction platform. At present, about 70 parties have been admitted as bidders. The majority of these are mandatory participants of the EU ETS. Investors, banks and credit institutions can also make bids.

The auction price, i.e. the price at which emission allowances are sold in a single auction, is arrived at through bidding. These are submitted closed within the predetermined bidding period, so bidders cannot see the bids of others. If demand outstrips supply, the bidders with the lowest bids receive no allowances. The winning bidders receive the allowances in their account in the CO2 registry one working day after the auction.

EEX publishes an auction calendar before the new year. This public calendar shows all auction dates and the number of allowances to be auctioned.

A market stability reserve came into force in 2019. This is an instrument of the European Commission (EC) to better match the supply and demand of emission allowances. The number of allowances in circulation (TNAC) is set by the EC every year in May. As a result, the auction calendar for the current year is subject to change.

You can find the up-to-date auction calendar here.

The auction volume on offer and the final auction price are public information. The price of emission allowances at auction is thus determined by the market and comes about through supply and demand. The price is volatile and is influenced by policy measures and factors such as developments in the energy markets.

The proceeds of the Dutch auctioned allowances benefit the general budget and are accounted for in the budget of the Ministry of Economic Affairs and Climate Policy.

You can find the current auction price (clearing price) here.

Emission allowances auction

How auctions work

Auction calendar

Auction price

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