February 24, 2012 / 3:40 PM / 8 years ago

UK to auction extra EU carbon permits in 2012

* Next auction schedule to be announced shortly

* Awaits ministerial approval for auction schedule

LONDON, Feb 24 (Reuters) - Britain will auction more European Union carbon permits than planned this year, a government spokeswoman said on Friday, as it aims to cash in on a surplus of permits for the second phase (2008-2012) trading period of the EU emissions trading scheme.

Since November 2008, the government has raised 1.35 billion euros ($1.80 billion) from the sale of 99 million permits sourced from a new entrant reserve for phase two.

The last scheduled auction is set for March 8, when it will sell 3.5 million carbon permits called EU Allowances (EUAs).

A spokeswoman for the Department of Energy and Climate Change (DECC) said the UK will hold further phase two auctions this year after the one in March.

“These auctions will be using surplus allowances from our New Entrant Reserve and we will be making an announcement on the next schedule of auctions shortly,” the spokeswoman said.

However, she declined to specify the number of allowances to be auctioned. “We need to get Ministerial approval for the auction schedule and the announcement will have market sensitive information,” she said in an emailed statement to Reuters.

The EU Emissions Trading System, the world’s biggest cap-and-trade scheme, has been hit by a glut of supply as flagging industrial output due to Europe’s fiscal crisis has eroded demand for carbon permits.

Benchmark carbon prices shed half their value last year, falling to a record low of 6.30 euros a tonne in December. They have since recovered somewhat, trading at around 9.25 euros a tonne on Friday.

The EU scheme sets a cap on the carbon dioxide emissions for around 12,000 power and industrial plants, as well as for all airlines using EU airports.

DECC has said it will auction 125-130 million EUAs annually between 2013 and 2020, as well as 7 million EU Aviation Allowances a year. The first batch of phase three auctions will also be auctioned later this year.

$1 = 0.7511 euros Reporting by Jeff Coelho; editing by James Jukwey

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