UK ETS auctions to begin on 19 May

Host platform the Intercontinental Exchange (Ice) has published the calendar for primary market auctions of allowances under the UK's emissions trading system (ETS).

The first auction of UK ETS allowances (UKAs) will be held on the platform on 19 May, and will continue to take place on alternate Wednesdays from here until the final sale of the year on 15 December.

Auctions from May-July are scheduled to contain 6.052mn allowances each, and those in September-December roughly 5.188mn each. August sales will contain 2.594mn permits, mirroring the halving of EU ETS volumes in that month in anticipation of lower holiday demand.

The bidding window for the auctions will be 12:00-14:00 UK time.

Ice will launch its UKA Futures Contract on the same day as the auctions, while its UKA Daily Futures will begin trading on 21 May.

The exchange will provide further details on contract specifications, rules and administrative procedures, access requirements and fees "in due course", it said.

"Today's publication will give businesses and operators clarity over this year's supply of emissions allowances, enabling them to plan ahead, build back greener and better prepare for the transition to a low-carbon economy," UK energy minister Anne-Marie Trevelyan said.

Ice was appointed host platform for the auctions in December, following the UK government's decision to set up a domestic ETS in place of the country's membership of the EU ETS, which terminated at the end of last year.

Ice had hosted auctions of UK-issued allowances under the EU ETS since November 2012, with the exception of 2019 when UK auctions were temporarily suspended owing to Brexit uncertainty.

The UK government earlier this month increased the transitional reserve price for UK ETS auctions to £22/t of CO2 equivalent (CO2e), from £15/t CO2e as set out in its original plans for the system. It expects to withdraw the auction reserve price "as the UK ETS matures".

By Victoria Hatherick