Obtaining emission allowances

Emission allowances are auctioned every week on behalf of the EU Member States. This auction is conducted by the German trading and auction platform European Energy Exchange (EEX). The auction allows interested parties to bid for and buy emission allowances. This is subject to strict admission requirements. The receiving party must have an account in the EU ETS Registry. 

In practice, it is mainly the large issuers, financial institutions and professional traders who acquire allowances through auctions. This is because these parties buy large volumes and the admission requirements are often too strict for small issuers. The EEX website lists the prevailing market price of EUAs and the volumes traded.

Trading platforms bring together supply and demand for emission allowances. In Europe, there are currently two large trading platforms on which emission allowances and their derivatives are traded: the German European Energy Exchange (EEX) and the British Intercontinental Exchange (ICE). The ICE unit that trades emission allowances is based in the Netherlands. 

Trading in financial derivatives, such as futures of emission allowances, also takes place on the platforms. A future is a contract to deliver a certain quantity of emission allowances at an agreed point in the future at an agreed price. There are contracts for delivery in the short term or further into the future. These futures can be traded on the trading platform until shortly before the time of delivery. This does not require an account in the EU ETS Registry. When the contract end date has passed, the allowances are  delivered through the EU ETS Registry and arrive in the account of the purchasing account holder. Without an account in the EU ETS Registry, delivery contracts cannot be met.

Like other trading platforms, the two platforms mentioned above are subject to admission requirements that may be a barrier for small issuers. On the other hand, trading platforms offer guarantees and assurances that deliveries and payments will take place.

A bilateral transaction is a transaction between two account holders, without intermediaries. Account holders are required to indicate in the EU ETS Registry whether a transaction is bilateral or not.

For the average account holder who needs a limited number of emission allowances, for example for the annual obligation, it is easier to buy allowances from another account holder than through an auction or a trading platform. The other account holder may be a organisation that has spare emissions allowances and wants to sell them, or a trader who buys up allowances for a fee and sells them on to businesses that need them. 

To find a suitable counterparty, you can consult the European Union Transaction Log (EUTL). This public European Commission website lists all account holders in the EU ETS Registry. You can search by specific countries and account type. If you need to swiftly receive emission allowances, it is best to contact an account holder with a trading account. Contact the account holder to find out if account holders want to sell allowances . The NEa is not allowed to provide information on this.