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German Emissions Trading Authority (DEHSt) at the Federal Environment Agency (Link to homepage)DEHSt - Auctions 2008-2012

Auctions during the second Trading Period (2008-2012)

Overview

Between January 2010 and November 2012 the Federal Republic of Germany offered approximately 41 million emission allowances (EUAs) annually for auctioning. The total amount of auctioned allowances was around 10 percent of the national emissions trading budget. In 2008 and 2009 the same amount was sold on a direct basis at carbon exchanges on a day-to-day basis. Following a tendering procedure by the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU), the auctions were held weekly at the spot and futures markets of the European Energy Exchange EEX in Leipzig until 2012.

During the years 2010 to 2012, a total of approximately 130 million EUA were sold in 269 individual auctions. This amounts to a total value of over 1.5 billion Euros and an average revenue of 11.64 Euros per EUA. Clearing prices generally did not deviate from lead markets by more than a few tenths of a percent. Thus, auctions were held almost in parallel to developments in the secondary market. These numbers do not cover those auctions of the third trading period that were brought forward to 2012 (so-called early auctions ). Adding the allowances, which were sold directly at emissions trading exchanges by the KfW between 2008 and 2009, the German sales volume adds up to approximately 212 million EUA with a total value of more than 3 billion Euros (see the following table). The Federal Republic of Germany has thus fully utilised the possible scope of auctioning emission allowances set by European law.

YearTypeDates*Sold
Volume
Average
Price**
Revenue
Total (EUA 2. TP)269212,056,00014.17 €3,005,170,559 €
2008Sale
(EUA 2nd TP)
 41,005,00023.16 €949,510,950 €
2009Sale
(EUA 2nd TP)
 41,125,00013.22 €543,544,744 €
2010Auction
(EUA 2nd TP)
9141,142,50014.36 €590,946,850 €
2011Auction
(EUA 2nd TP)
8940,675,50013.81 €561,569,835 €
2012Auction
(EUA 2nd TP)
8948,108,0007.47 €359,598,180 €

* Auction dates
** Volume-weighted average

The latest auction results are published in EEX’ trading system and the EEX website immediately after the auctions.

Pursuant to the the Ordinance on the Auctioning of Emission Allowances 2012 (EHVV 2012), the German Emissions Trading Authority (DEHSt) is the competent authority that takes on various tasks related to the auctions. As auctioneer of emission allowances, we commissioned the KfW banking group (KfW) to sell them on our behalf. The KfW group has already been commissioned with allowance sales by the Federal Government in 2008 and 2009 and could thus gain crucial experience regarding the seller function at emissions trading exchanges. In case of distortive bidder behaviour, we could have decided on action and thus complemented existing supervisory structures at the exchange. We also regularly published evaluation reports concerning the second trading period to keep the public and market participants informed on auction results.

Procedure

The weekly futures and spot contract auctions at the EEX were part of regular exchange trading. This ensured that the high security standards of the exchange’s surveillance and procedural structures applied also to primary market auctions. Exchange trading is regarded as a secure and cost-efficient instrument and is also applied to Europe-wide auctions during the third trading period.

The auction procedure was broadly laid down in the Ordinance on the Auctioning of Emission Allowances (Emissionshandels-Versteigerungsverordnung, EHVV 2012). A single-round, uniform-price procedure was applied at auctions. The auction clearing price was determined by ranking all bids entered, starting at the highest bid. If two bids are equal they are ranked according to the time they were entered into the trading system. The bids are added to match the quantity of allowances traded, starting with the highest bid. The price at which the total amount of bids reaches or exceeds the available quantity of allowances determines the auction clearing price. As auctions are conducted with a closed order book, each bidder can only see their own bids. The minimum bid size was 500 EUAs in auctions on the spot market and 1,000 EUAs in auctions on the futures market.

Participation

Participation was possible either directly for EEX members or indirectly via a broker or for customers of an EEX member. This ensured that small and medium-sized enterprises that have no dedicated trading department can benefit from the auctions. Exchange members already admitted to emissions trading on the EEX could participate in the weekly auctions at no additional cost or fixed charges.

Quantities

Alongside the legally defined basic annual amount of 40 million EUA, additional EUA from the national reserve were auctioned every year to cover costs incurred by the Federal Government in the exercise of its duties and responsibilities in connection with emissions trading (refinancing volume). In 2012, additional allowances from the reserve were auctioned to refinance expenses from reimbursing the general emissions trading fee in line with the emissions trading cost ordinance 2007 (special refinancing volume).

The annual refinancing volumes and special refinancing volumes were determined by the average clearing prices of the calendar months January to October and the nominal refinancing need (system costs). The respective volumes were published on our website by 05/11 of the relevant year. This was the date on which the total annual volume of allowances to be auctioned were determined.

In 2010 and 2011, the annual refinancing amount was approximately 1 million EUAs, which corresponds roughly to the amounts sold by KfW in 2008 and 2009 to refinance DEHSt. However, in 2012, due to the special refinancing volume and the relatively low market prices, the total annual volume was approximately 8 million EUA and thus clearly above that mark.

Our publications regarding the refinancing amount of the past three years can also be found on our website.

Dates

Auctions were held twice weekly on the spot and futures market of the EEX. In 2010 and 2011, 300,000 EUA for immediate delivery (spot contracts) were auctioned on Tuesdays and 570,000 EUA for delivery in December of the respective year (futures contract) on Wednesdays. From November, 870,000 EUA were auctioned on the spot market only, with exceptions for end-of-year auctions. Depending on the total annual volume, 252,500 and 655,500 EUA were auctioned respectively.

In 2012, auction volumes were slightly increased compared to 2010 and 2011. The weekly quantities offered for futures contracts (F2EA) increased to 645,000 EUA from January and to 850,000 EUA from June. For spot contracts (T2PA), by contrast, quantities offered for the same period remained at 300,000 EUA. In November 2012, spot market quantities increased to 1,150,000 EUAs. The reason for this increase was the special refinancing volume for 2012.

To the topic

Download: EEX Auction Calendar 2012

Date: 22/01/2014

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