Nov. 10 (Bloomberg) -- The European Union cannot sell spot permits for the third phase of its carbon-trading program before 2012 because the registry that tracks ownership is unable to create them, the EU commission’s carbon coordinator said.

The bloc may be able to sell futures or promissory notes for the phase before 2012, the commission’s Peter Zapfel said in a phone interview today. “We are still in the process of deliberating on this. We acknowledge the need for an early start.”

In phase three, which begins in 2013 and ends in 2020, power stations in Europe will get almost no allowances for free, unlike the first two phases. The European Commission, regulator of the world’s largest carbon-trading market, needs to do more to provide so-called phase-three emission allowances over the next few years, according to the International Emissions Trading Association in Geneva.

Regulators have shown a “lack of attention” to immediate demand for allowances in the phase, the group said Nov. 6. Members of the association include RWE AG and Morgan Stanley.

Utilities can sell power three years ahead and have asked for corresponding carbon allowances. RWE, Europe’s biggest emitter, recommended in a July submission to the commission that 10 percent of 2013 allowances be auctioned next year to allow utilities to lock in profit on forward contracts. Otherwise, the company is vulnerable to a surge in carbon prices, it said.

“We will need some temporary way of getting around the fact that the phase-three allowances can only be created in the registry in 2012,” Zapfel said.

‘Adapting’

The commission is adapting its Community Independent Transaction Log, which tracks ownership of allowances among the 27 nations of the bloc and links with the United Nations registry, for the new phase, according to an EU Web site.

The EU may sell about 1 billion metric tons of allowances a year in the phase, Zapfel said in March. At today’s benchmark price of 13.73 euros ($20.54) a ton, those sales would be worth 13.7 billion euros a year.

Zapfel urged EU nations to use a single sales platform being developed by the commission. “Our initial preference is for fewer rather than more parallel platforms.” The U.K. is among nations wanting to hold their own auctions.

The commission is trying to avoid having multiple sales platforms because that may create confusion similar to that prompted by the 27 allocation plans that currently help govern the market in the second phase, the five years through 2012, Zapfel said. Such discretion by nations was shown to be “undesirably broad,” he said. “We would like to avoid a repeat.”

A single sales platform will cut costs by an unspecified amount, Zapfel said. “If you look at the volume of the allowances and you compare to other markets, it’s not really that big.”

For instance, in debt markets, Germany has planned to issue 329 billion euros worth of sovereign debt this year. Last year it issued 220 billion euros.

To contact the reporters on this story: Mathew Carr in London at m.carr@bloomberg.net

Last Updated: November 10, 2009 13:02 EST