9. In the Californian model for auctions there are specific cost containment mechanisms  (principally absent in the EUETS save Article 7(6) and Article 57 of the Auctioning Regulation) like reserve price and auction purchase limit (for particulars see "The Cost Containment Mechanisms in the California Cap-and-Trade Program – why absent in the EUETS?").


10. Persons eligible to apply for admission to bid – The main, most frequent categories of persons eligible to apply for admission to bid directly in auctions, pursuant to Article 18(1) (a) – (c) of the Auctioning Regulation, are in the EUETS the operators of the installation (or aircraft operators) having an operator holding account (but bidding only on its own account), including any parent undertaking, subsidiary undertaking or affiliate undertaking forming part of the same group of undertakings as the operator, investment firms authorised under Directive 2004/39/EC, and credit institutions authorised under Directive 2006/48/EC (the two last categories bidding on their own account or on behalf of their clients). Participants listed in Article 18(1) (d) – (e) of the Auctioning Regulation are passed over here because they seem to be of minor importance.


The eligibility to admission to bid in the auction is in this manner in the EUETS regulated more restrictively than the general requirements for participation in trading in emission allowances (the scheme is open for any person wishing to create an account in the registry). The issue is analysed in more detail in “The eligibility to admission to bid in the auction pursuant to the Auctioning Regulation”.


Under the provisions of the Regulation Order proposed by Californian Air Resources Board, however, an entity registering as an auction participant must be registered as ‘covered entity’, ‘opt-in entity’ and ‘voluntarily associated entity’ and the scheme seems not to provide for restrictions present in that field in the EUETS.

Especially the category ‘voluntarily associated entities’ will be capacious because Californian cap-and-trade Regulation Order reads in this field as follows:

“The following entities may qualify as voluntarily associated entities:

(A) An entity that does not meet the requirements of sections 95811 and 95813 that intends to purchase, hold, sell, or voluntarily retire compliance instruments; or (B) An entity operating an offset project that is registered with ARB pursuant to subarticle 13”.


It follows that any entity wishing “to purchase, hold, sell, or voluntarily retire compliance instruments” in California may qualify. To conclude this thread, Californian model of auctioning is far more open for participants than EUETS in that field.


Finally, it should be recalled that rules on Californian cap-and-trade are still work-in-progress and in the course of further analyses the envisioned measures may change. The above-considered comparisons are based on the version adopted by the ARB on 16 December 2010 (see: California Environmental Protection Agency Proposed Regulation to Implement the California Cap-and-Trade Program PART I Volume I Staff Report: Initial Statement of Reasons, Release Date: October 28, 2010, http://www.arb.ca.gov/cc/capandtrade/capandtrade.htm).


Furthermore, the answer to the question, which of these two sets of rules, dealing with the same matter, is better suited to the market, is obviously not easy. The considerations on the issue should inevitably take into account the differences in the regulatory environment and the actual structure of the European and Californian markets, in particular, for the energy. One of the main purposes of the primary market in emission allowances is to secure constant influx of sufficient amounts of emission allowances into the secondary market, without disturbing the latter to an excessive extent. The near future will show in practice which scheme better serves such a function.



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