Clean Energy Regulator seeks auction system for carbon market

Auction system to run government’s carbon unit pricing system

The Clean Energy Regulator, which administers the federal government’s carbon pricing scheme, is seeking a new software system to manage the auctioning of carbon units when the scheme when shifts from fixed pricing to variable pricing in 2015.

Currently, businesses responsible for large scale carbon emissions pay a fixed price per tonne, with that price set to increase in the 2013-14 and 2014-15 financial years. From 1 July 2015 onwards, the federal government will issue a number ‘carbon units’ that will be auctioned off by the Clean Energy Regulator.

The first auction of ‘Australian Carbon Units’ will take place in the first quarter of 2014, with the Clean Energy Regulator intending to sign a contract for the provision of the auction software in December this year. The regulator is seeking an auction solution and a settlement solution; alternatively businesses can put forward an end-to-end solution for auction and settlement.

The auctioning of carbon units will take place in sequential ascending clock auctions: The regulator will announce a price per carbon unit, with bidders indicating how many units they will pay for at that price. If organisations bid for more carbon units than are available, the price will be raised and a new round of bids will be taken.

The process is repeated until the number of carbon units on offer exceeds the number that organisations have submitted bids for; at this point, bidders pay the price from the preceding round of bidding. In any financial year there may be up to eight carbon auctions.

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