PART 2Auction Design
Auction clearing price and resolution of tied bids6.
(1)
The auction clearing price must be determined upon closure of the bidding window.
(2)
An auction platform must sort bids submitted to it in the order of the price bid.
(3)
Where the price of several bids is the same, these bids must be sorted through a random selection according to an algorithm determined by the auction platform before the auction.
(4)
No bid below the auction reserve price is to be accepted.
(5)
The volumes bid must be added up, starting with the highest bid price, and ignoring any bid below the auction reserve price.
(6)
All bids making up the sum of the volumes bid determined pursuant to paragraph (5) must be allocated at the auction clearing price determined in accordance with regulation 7.
(7)
Where the total volume of successful bids determined pursuant to paragraph (5) exceeds the volume of auctioned allowances, the remaining volume of the auctioned allowances must be allocated to the bidder that has submitted the last bid making up the sum of the volumes bid.
(8)
Where there are any unsold allowances—
(a)
they are to be added to the next four auctions to be held by the appointed auction platform, evenly distributed, so that a quarter of the unsold allowances is added at each subsequent auction; or
(b)
if doing so would increase the volume of any of the next four auction to more than 125% of the volume first proposed for that auction (the “125% volume”), any allowances in excess of the 125% volume at that auction must—
(i)
be added to any other of the four auctions for which that would not be the case, or
(ii)
if all the next four auctions would be increased to more than 125% of their first proposed volume, be added to the market stability mechanism account held by the UK ETS Authority under Part 3 of Schedule 5A to the Trading Scheme Order.
(9)
F4(9A)
The auction reserve price will increase on 1st January 2027 and annually on 1st January in accordance with the following formula—
where—
A is the auction reserve price as at the preceding 31st December, and
B is the most recent annual GDP deflator figure.
(9B)
Where an auction reserve price calculated in accordance with paragraph (9A) includes a fraction of a penny, it is to be rounded up to the nearest whole penny.
(9C)
If the most recent annual GDP deflator figure is 0 or a negative number, the auction reserve price will not be calculated in accordance with paragraph (9A) on 1st January but will instead remain unchanged.
(9D)
In any year the Treasury may by direction specify the auction reserve price as any sum that the Treasury consider appropriate.
(9E)
Where the Treasury make a direction under paragraph (9D), the auction reserve price will be uprated in accordance with paragraphs (9A) to (9C) from the following 1st January, unless otherwise specified in that direction.
(10)
The Treasury must publish any direction given under F5paragraph (9D) in such manner as they think fit.
F6(11)
This regulation is subject to regulation 7(1A).
F7(12)
For the purposes of this regulation—
“most recent annual GDP deflator figure” means, as at the preceding 31st July, the annual ‘gross domestic product at market prices: implied deflator’ figure for the United Kingdom, which is available and published—
(a)
by the Office for National Statistics,
(b)
within the most recent quarterly national accounts, and
(c)
under dataset identifier IHYS.
(13)
A reference in these Regulations to the “auction reserve price” is to the auction reserve price determined in accordance with paragraphs (9) to (9E).