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ECN publication
Financial effects of ETS Set Aside
Published by: Publication date:
ECN Policy Studies 15-11-2012
ECN report number: Document type:
ECN-N--12-019 External memo
Number of pages: Full text:
10 Download PDF  

The EU ETS has a growing surplus of allowances built up over the last few years. The economic downturn is regarded to be a major cause of the oversupply and the low level of the CO2 allowance price. From 2013 onwards, the ETS will enter its third phase in which a substantial part of the allowances now will be auctioned. In summer 2012, the European Commission proposed a draft Regulation to adjust the timing of auctions of emission allowances (EC 2012a). The Commission states that it is not wise to feed a market that is already oversupplied and wants to auction less allowances in the next years (set aside). These set aside allowances should then be auctioned in the later years of the 2013-2020 ETS period (backloading). The proposal document does not suggest permanent withdrawal of allowances, since this requires amending the ETS directive. However, permanent withdrawal (cancellation) is certainly considered as an option to reinforce the ETS.

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