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EU plans early carbon market auctions from July

FILE PHOTO: European Union flags flutter outside the European Commission headquarters in Brussels

BRUSSELS (Reuters) - The European Union plans to conduct early carbon market auctions, starting from July, to raise extra funds to help countries quit Russian gas and cut emissions, the European Commission said on Monday evening.

The EU plans to raise 20 billion euros ($21.62 billion) in grants from its carbon market, with 8 billion euros of that coming from carbon permit sales held earlier than planned.

The European Commission said up to 16.5 million extra carbon market permits would be auctioned early in 2023.

The remainder of the 20 billion euros would be raised from a carbon market fund designed to support innovative green technologies, but this cannot start until the EU tweaks its law on carbon market auctions to confirm the new volumes.

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The fund would be replenished by selling 27 million carbon permits into the market from a special reserve, the Commission said.

Countries will be permitted to spend the grants on renewable energy and energy-saving renovations to help replace Russian gas, and projects to aid heavy industries decarbonise.

The EU carbon market forces power plants and factories to buy CO2 permits when they pollute, and is the bloc's core policy for cutting planet-warming emissions.

Carbon prices hit 100 euros per tonne for the first time last month, hiking costs for industries, but boosting the case to invest in some green technologies.

In principle, the carbon permits would be sold in equal volumes by August 2026, the Commission said.

($1 = 0.9250 euros)

(Reporting by Kate Abnett; Editing by Sherry Jacob-Phillips)