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Auctions of emission allowances

Legislation will be introduced in Finance Bill 2007 to put in place the legislative basis for auctioning of carbon dioxide emissions allowances under the EU Emissions Trading Scheme.
 

Our view
This will mean that the UK government will be able to take the first tentative step towards a true 'polluter pays' approach to UK emissions and hopefully establish working mechanisms for a wider auction of allowances for future periods after the end of EU ETS Phase II in 2012. At present the vast majority of the UK's capped share of EU emissions allowances under Phase II will still initially be allocated for free to relevant UK businesses.