The draft Commission Regulation amending Regulation (EU) No 1031/2010 determines the volumes of greenhouse gas emission allowances to be auctioned prior to 2013. But it should be remembered that EUAs sold in early auctions starting in 2012 will be barred from compliance use in the second trading period.

The draft Commission Regulation amending Regulation (EU) No 1031/2010 to determine the volume of greenhouse gas emission allowances to be auctioned prior to 2013 has been released recently. In my opinion the proposed therein amendments (strictly 11) are mainly of technical nature following the actual specification in the Annex I to the Regulation of the – lacking so far - exact volumes of  allowances auctioned prior to 2013 and the auctioned product through which they shall be auctioned (forwards or futures).

The two of the said proposals for amendments of the Auctioning Regulation seem to be of particular relevance for 2012 CO2 emission market:

1) the addition to the Article 8(4) - regarding timing and frequency of the future auctions,

2) the amendment to the Article 32(1) – regarding volumes of allowances attributed to each specific auction in 2012.

Beneath a short description of the said two changes.

Article 8(4) of the Auctioning Regulation currently provides that as from the sixth auction or earlier, the joint auction platform shall conduct auctions of allowances covered by Chapter III of Directive 2003/87/EC (excludes aviation allowances) on a weekly basis at least and auctions of allowances covered by Chapter II of Directive 2003/87/EC (covers aviation allowances) shall be conducted on a two-monthly basis at least.

Draft Regulation at issue envisions an addition (reservation) to the said provision according to which during the year 2012, those auction platforms may conduct auctions of allowances covered by Chapter III of Directive 2003/87/EC in 2012 on a monthly basis at least.

It follows that we can expect that early auctions of allowances (aviation allowances excluding) will be carried out in 2012 at least monthly. And this is an important premise for any further potential analysis for  the market parameters in 2012 – assuming obviously that the draft amendment becomes a binding law.