Slow start for Spot Trading due to missing allocation and ITL connection

Participants in the EU ETS still did not receive any clarity or deadline on when allocation of their 2nd phase EUAs is going to take place. So far, national governments, except Austria, Denmark and Finland, hesitate to allocate because of the missing link between the ITL and the CITL. The consequence of the missing link could be that allocations and transactions undertaken on the CITL will be displayed incorrectly on the ITL, when the connection is in place. This would then require a lot of manual corrections. To avoid this risk, national governments are postponing allocation of 2nd phase EUAs.

Currently, it is expected, that testing of the ITL against 27 national registries will start in May and will be finalised in late summer. That means, that the connection between the ITL and CITL will not be live before autumn, having major influence on Spot trading activities as well as on quarterly reports of many companies not being able to compensate their under-compliance and include the costs in their quarterly reports.

Another consequence of the missing connection between the ITL and CITL is that CERs cannot be transferred from the Registry with the CDM Board into the national registries. So far, the Swiss and Japanese Registries as well as the Registry from New Zealand have been connected to the ITL. Although this enables companies to transfer their CERs between these registries, activities in these registries are still rather slow. From a European perspective, an account with the Swiss Registry seems the easiest way to obtain CERs on a personal account and to allow trading. Transferring, however, is still difficult. In order to transfer CERs from the “Pending Account” of the ITL into the Swiss Registry, a Letter of Approval (LoA) from Switzerland is required for the CDM project, the CERs are associated with.
LoAs for CER transfers, missing allocations of EUAs and the missing connection from the ITL to CITL complicates the life of the plant operator and slows down Spot Trading activities.