Greenhouse Gas Emissions Trading Scheme Auction
United Kingdom
March 2002

The UK Greenhouse Gas Emissions Trading Scheme (ETS) is being introduced by the UK Government as part of the UK Climate Change Programme.  Emissions trading is an approach designed to allow greenhouse gas emission reductions to be made in the most economically efficient way.  Emissions trading is already being developed internationally – it is part of the Kyoto Protocol, and the European Commission has proposed that EU-wide trading at the company level should start in 2005.  The UK emissions trading scheme started in April 2002.  Direct participants wishing to enter into the UK ETS did so through the ETS Auction.

The UK Government made available £215 million over 5 years as an incentive for direct participants to enter into the scheme. The incentive payments were allocated by a descending-clock auction.  The organisations who were interested in obtaining incentive payments for making emission reductions participated in the auction during which they offered a quantity of emission reduction in exchange for a given price per tonne of carbon dioxide equivalent (tCO₂e).

The UK ETS Auction was operated on the PowerAuction software system in March 2002.  Further details about the UK Greenhouse Gas Emissions Trading Scheme can be found on the DEFRA website.