The Official Journal of the European Union published on 18 November 2010 Regulation Nº 1031/2010 of 12 November 2010 on the timing, administration and other aspects of auctioning of greenhouse gas emission allowances. This Regulation aims to establish common rules in order to run a single auction system, considered as the most effective for the proper functioning of the single market.

Regulation Nº 1031/2010 on some aspects of auctioning of greenhouse emissions, proposed by the European Commission in July 2010, provides for rules on the timing, administration and other aspects of the auctioning of allowances under Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowances trading within the Community.

The rules put forward by this Regulation will be specifically applied to the allocation through auctions of allowances to aviation (under Chapter II of Directive 2003/87/EC) and to the allocation through auctions of allowances for stationary installations (under Chapter III ), valid for surrendering in trading periods from 1 January 2013.

As established by the Regulation the allowances will be offered for sale on an auction platform by means of standardised electronic contracts traded on that auction platform, ‘the auctioned product’. In this sense, one of the improvements determined in the revision of 2003 Directive was that auctioning should be the basic principle for allocation, as it is the simplest and generally considered to be the most economically efficient means of doing so, as it relies on a clear carbon price signal to achieve abatement of greenhouse gas emissions at least cost.

According to the majority of stakeholders involved in the consultation prior to the adoption of Regulation setting out the modalities for the EUwide auctioning of emission allowances, the overwhelming majority of Member States and the impact assessment carried out by the Commission, a common auctioning infrastructure where a common auction platform conducts the auctions best achieves the overarching objectives of the review of Directive 2003/87/EC.

This Regulation establishes the action formats, as well as modalities for submission and withdrawal of bids. It also lays down that the auction clearing price will be determined upon closure of the bidding window and that the auction platform will sort bids submitted to it in the order of the price bid. Where the price of several bids is the same, these bids shall be sorted through a random selection according to an algorithm determined by the auction platform before the auction.

Regarding the auction calendar, timing and frequency, the Regulation established that an auction platform will conduct auctions separately through its own regularly recurring bidding window. The bidding window will be opened and closed on the same trading day, and kept open for no less than two hours. It also details the economic operators ans persons entitled to submit bids directly in an auction.

Regulation Nº 1031/2010 on the timing, administration and other aspects of auctioning of greenhouse gas emission allowances will enter into force on 19 November 2010.