EU launches call for carbon market auction contract

(Reuters) - The European Commission on Monday invited carbon emission platforms to apply to host sales of permits in the European Union emissions trading system (ETS) from 2021.

FILE PHOTO: A coal-fired power plant is partially covered by morning fog, next to the town of Megalopoli, Greece, March 11, 2020. REUTERS/Alkis Konstantinidis

The Commission plans to award a five-year contract, estimated to be worth 750,000 euros ($810,225), to host EU ETS auctions from the start of next year.

The auctions will be held on behalf of 25 EU member states and Norway, Iceland and Liechtenstein - the three non-EU countries that participate in the EU carbon market.

The auctions, which currently take place on the European Energy Exchange (EEX) platform, typically happen three times each week.

“EEX is keen to continue its successful role as auction operator in Europe and as such, it will carefully review the tender documents,” a spokesman told Reuters.

The successful platform will also host auctions of carbon permits set aside for the EU’s modernisation fund and innovation fund, two pots of carbon revenues which will be used to support low-carbon investments during the 2020s.

The auction contract will be awarded on the principle of best value for money, the Commission said.

Companies have until June 29 to request to participate in the procurement process. The Commission will assess these requests and successful candidates will be invited to submit a technical and financial offer.

The EU ETS is the bloc’s main policy to curb greenhouse gas emissions, which it does by forcing power plants, factories and airlines to buy carbon permits to cover their pollution.

Around 57% of EU carbon permits are sold at auction. The Commission gives the remaining permits to industrial firms and airlines for free, to help them remain competitive in international markets.

Next year’s ETS auction calendar will be published in the autumn, the Commission said.

Germany and Poland sell their shares of EU carbon permits through individual auctions on the EEX.

Britain sells its share of EU carbon permits through individual auctions on the ICE, although the country is expected to exit the EU ETS at the end of 2020 if the Brexit transition period is not extended.

Reporting by Kate Abnett; editing by Nina Chestney, Ken Ferris and David Evans