Dóra Fazekas Carbon Market Implications for new EU - UniCredit ...

generating opportunity, since auctions were only conducted in 2006, following a steep drop in
prices.
Hungary, in its National Allocation Plan, set aside 2.5% of its total allocation – 790,000 tonnnes –
for auctioning in each year of the EU ETS pilot phase (per Government Decree no. 66/2006).
Ultimately, Hungary sold a total of 2.4 million emission allowances at two auctions; this equaled
more than 4% of the country’s total allocations. The 1.5% difference was accounted for by
additional allowances from the NER and allowances received from closing installations.
The first auction, organized by the Ministry of Finance, took place on December 11, 2006, and saw
a total of 1,197,000 EUAs changing hands for a price of 7.42 EUR per tonne. The auction netted
revenues of 8.882 million EUR for the central budget. The auction also led, however, to
disagreements between the Ministry of Environment and Water and the Ministry of Finance. The
former wanted to see the auctions take place as soon as possible, and blamed the Ministry of
Finance for the delay, pointing out that prices had dropped significantly by the time the reserved
allowances were finally auctioned in December 2006. The second auction was held on March 26,
2007; 1,177,500 EUAs were auctioned for a price of 0.88 EUR each. The auction generated
revenues of 1.036 million EUR.!
The electronic auction was held on the Hungarian euets.com CO2 trading platform. All entities or
individuals holding an account at an emissions trading registry in any EU Member State were able
to participate in the auction. Originally, the Ministry of Finance was planning on holding two
sessions for each auction, but the entire quantity set aside was sold during the first round both in the
December auction and in the March one. The auction was a uniform-price auction where the
clearing price could not be lower than the minimum price determined by the auctioneer. In
accordance with a preliminary study conducted by the Regional Centre for Energy Policy Research,
the GOH set a minimum price for the auction (see Appendix V). Bidders had to place their bids in
the given time period and could not withdraw them after the termination of the bidding phase. The
bids were not visible to other bidders, which is a scenario known as a blind or sealed-bid auction.
The bidders needed to deposit their collateral for the purchase with the clearing house of euets.com,
or with any member of the Climex Alliance, two business days before the date of the auction. The
clearing and settlement of the transactions was completed within two business days of the auction.
Government Decree no. 109/2006 spells out the rules for the sale of allowances. The managers of
state property must develop, in consultation with the Minister of Economy and Transport, a
proposal for the regularity and scheduling of sales, along with the quantity to be sold. Once the
Minister of Finance has approved the proposal, he initiates the sales. The Ministry of Environment
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