LONDON: The European Energy Exchange (EEX) was forced to cancel an auction of 4.02 million spot European Union emissions permits on behalf of Germany on Friday because it would have cleared below the reserve price, EEX said.
The second cancellation of a German carbon auction in two months underscores weak demand for permits in the EU's carbon market.
Both failed because they would have cleared below the carbon price on the secondary market.
"The auction volume will now be evenly distributed over the next four scheduled auctions," EEX said, which are held every Friday from 0800-1000 GMT.
"The auction calendar will be adjusted accordingly and an updated version will be published soon."
Prices for benchmark EU carbon futures were trading around 6.5 percent lower at 4.96 euros ($6.56) a tonne by 1033 GMT.
Traders warned there would be more failed auctions as the market waits for a European Commission proposal to temporarily withdraw permits from the market to be passed.
Prices for EU carbon permits have lost over 70 percent of their value since May 2011, mainly due to a glut of permits exacerbated by slowed economies.
To help boost prices, the European Commission proposed last year to temporarily remove some 900 million EU carbon permits from the market. The proposal has been going through the EU process for months.
On Tuesday, the European Parliament's environment committee voted through a legal amendment but failed to agree on early legislative drafting.
The risk now is that a plenary session of the European Parliament in March or April will reopen further debate, rather than just drive through a piece of ready-drafted legislation.
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