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Carbon allowances auction held

The government today auctioned off four million credits to emit CO2 and other greenhouse gases, known as EU allowances (EUAs)

The first auction of Phase II of the EU Energy Trading Scheme (ETS) with all EUAs going for a total of £54 million.

Under the ETS, the total greenhouse gas emissions from 12,000 heavy emitters are capped at a certain amount of tonnes, for which an equivalent amount of EUAs are issued.

At the end of the year companies have to hold EUAs to cover their carbon dioxide emissions and other gas outputs.

They can trade among themselves to ensure they have the right amount of EUAs.

Energy and climate change minister Mike O'Brien, said: "Today's first Phase II auction demonstrates continued UK leadership in reducing carbon emissions as part of the fight against dangerous climate change.

"The EU ETS is central to keeping the price of tackling climate change as low as possible to industry and the economy."

Next year the government plans to sell a total of 25 million allowances, each of which allows one tonne of emissions.

By 2013, the government plans to auction off all the allowances required by the power sector.

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