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

What was the reason for this anomaly? The Regional Centre for Energy Policy Research study
(REKK, 2006) points out an exception to the above-mentioned rule: when many buyers need
emissions allowances in a great quantity, they can only procure these at the exchange by driving
prices up. In this case, they may be willing to make purchases above the market price, given the
urgency of their needs. In response to the author’s question, the experts of Vertis Zrt. agreed that
this exceptional scenario might have been exactly what arose in Hungary, with participants willing
to pay more for allowances in order to obtain a greater quantity of them. This is also supported by
the fact that bidders made offers for 3.42 million allowances in December 2006: this is almost three
times the amount than was originally intended for sale. In March 2007, bids were entered for 2.4
million allowances – demand was over twice as high as the actual supply offered for sale.
Essentially, buyers were willing to pay a premium price for the large quantity. 25 At the same time, it
may be supposed – but cannot be confirmed based on the information available – that foreign
companies turned to Hungarian-auctioned allowances for covering their own shortages.
25 Unfortunately, it proved impossible to collect information on who purchased emissions allowances and in
what quantity.
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