Auctioning - Carbon under the hammer

As the EU emissions trading scheme gears up for its second phase, countries are deciding how much of their allocations will be auctioned. Oliver Holtaway reports

Countries participating in the EU emissions trading scheme (ETS) are now in the process of drafting and submitting their national allocation plans (NAPs) for the scheme's second phase, which runs from 2008-2012.

As in phase one, the vast majority of these allowances will be given away free to installations by governments. But many observers, including economists, academics and environmental pressure groups, say that the EC should be doing more to encourage the use of auctioning as a means of