Bloomberg News

EU Carbon Permits Drop to One-Week Low as Auction Volumes Rise

January 09, 2013

European Union carbon allowances fell to the lowest in a week as German power dropped to a record and nations boosted the number of permits sold in auctions.

EU permits for delivery in December declined 4 percent to close at 6.21 euros ($8.11) a metric ton on London’s ICE Futures Europe exchange in London.

German baseload power for next year lost 0.4 percent to 44.75 euros a megawatt-hour, broker data show. Lower prices can reduce the incentive to sell electricity forward, trimming need for allowances.

Carbon has dropped 16 percent in the past year and the EU commission in Brussels, which regulates the market, proposed in November to temporarily reduce the volume sold in auctions planned for the next three years. The amount offloaded will rise to 18.8 million tons next week from 14.7 million tons this week, according to data from exchange websites. That’s the biggest weekly volume scheduled to be sold in 2013, according to data compiled by Bloomberg.

Auctions held Jan. 7 and Jan. 8 attracted 14 bidders each, according to data from the website of the European Energy Exchange AG in Leipzig, Germany.

“There are lots of auctions going on,” said Matteo Mazzoni, a NE Nomisma Energia Srl analyst in Bologna, Italy. “There weren’t many people participating,” he said today in a phone interview.

Carbon may not fall much more over the next couple of weeks and then will probably drop below 5 euros next month when factories receive confirmation of the volume of allowances they will receive for free for the year, Mazzoni said.

In past years factories have sold after getting granted permits, he said.

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

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net


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