The commission confirmed on Monday that Germany, Poland and Britain opted out of the common platform plan for auctioning emission allowances for the trading period starting in 2013.
No reasons were disclosed, but analysts said the countries’ decisions might have been motivated by security concerns over a single large carbon registry operating after recent hacking incidents crippled five national carbon registries, immobilizing carbon trading, and caused losses to credit owners.
Analysts described the three countries’ move as a blow to the European system, making the emissions market more complex and driving transaction costs.
But the commission said preparations for the procurement of both the common auction platform that will be used by all other member states and the single auction monitor that will monitor auctions on all auction platforms are ongoing.
“Almost 60 percent of the total allowances auctioned in phase 3 will enter the market via the common platform,” the commission said in a statement.
Under the trading system’s rules, Germany, Poland and Britain will have to determine the identity of their intended opt-out platforms and the details of the auctions they will conduct.
The commission will then verify that the platforms satisfy E.U. rules and objectives. It will require approval by the EU Climate Change Committee, after which the European Parliament and the European Council will have three months to raise objections before the Commission finally adopts it.
Europe is entering the third phase of the world’s largest carbon trading scheme with a few modifications in the manner of distributing credits.
In the first two trading periods, which ran from 2005 to 2012, almost all of the carbon permits were distributed to emitters for free, which reportedly caused a drop in carbon prices.
From 2013 to 2020, about half of the allowances will be sold to firms through auctions. The scheme allowed countries to auction only up to 5 percent of allowances in the first period from 2005 to 2007 and 10 percent in the second period from 2008 to 2012.
The E.U. Emissions Trading System is a cornerstone of the European Union’s policy to combat climate change and its key tool for reducing industrial greenhouse gas emissions cost-effectively. It covers some 11,000 power stations and industrial plants in 30 countries that operate on a “cap-and-trade” principle.
