Dec 10 2011

Award Decisions for first call to come in Oct 2012 earliest

The EC announced on 2 December that the EIB had received the 300 M carbon allowances (also known as EUAs) that, once monetised, will form the NER300 pot. The monetisation of 200 M of them must be completed within 10 months of this date, i.e. 2 October 2012. This money will finance winning projects from the first call for proposals. This would mean that Award Decisions cannot be signed before that date, as until then the size of the NER300 pot will not be known with certainty.

The EIB said on 5 October 2011 that it intended “to sell [the remaining 100 M allowances] immediately after the conclusion of the sales of the first tranche”, but has backtracked from this position, recognising that, coupled with need to complete the early auctioning of 120 M Phase 3 EUAs by the end of 2013, EUAs might be over-abundant and attract very low prices. Now it says, “Sales of the second tranche may […] not continue immediately after the first tranche is finalised and may only be completed by end 2013.” The investment bank Morgan Stanley had predicted this change of heart at a conference held the day after the original announcement was made.

An analyst interviewed by Bloomberg noted that in the week that followed the transfer to the EIB of EUAs, “December 2013 [traded EUA] volumes jumped to 16 percent of the market […] from 9 percent”. NER300 EUAs are ‘December 2013’ EUAs (i.e. purchasers commit to buy them now at an agreed price but they are only delivered and paid for in December 2013), implying that monetisation has begun.

The EIB will produce monthly reports on overall EUA sales volumes achieved and aggregated prices obtained. The first of these, relating to monetisation in December 2011, will appear no later than 13 January 2012 [UPDATE: the EIB reported on 21 Dec that the first report “will be issued on or around Jan 11”]. This information will be tracked on this page of NER300.com.

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