The CCM is a tool that allows the UK ETS Authority to intervene if carbon prices are elevated for an extended period. The CCM will be triggered in 2023 if the average allowance price on the secondary futures market is three-times the average price for the preceding 2-year period, for 6 consecutive months. If the CCM is triggered the UK ETS Authority will intervene. This intervention can include:
Redistributing allowances between the current year’s auctions
Increasing the volume of allowances to be auctioned by:
Bringing forward auctioned allowances from future years
Drawing allowances from the market stability mechanism account
Auctioning up to 25% of the remaining allowances in the New Entrants’ Reserve
Auctioning allowances which form part of the industry cap on free allocation to stationary installations for the current or past scheme years where the amount of free allocation is lower than the industry cap
Bringing allowances into auctions from the flexible share
For more details regarding how the CCM can be triggered, click here.