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U.K. CO2 Auction Fetches First Premium to Prior Close (Update1)

By Mathew Carr

July 9 (Bloomberg) -- Britain, the European Union’s second- biggest economy, sold emission permits today at a higher price than yesterday’s close, the first such premium in the country’s four auctions over the past seven months.

The U.K. sold 4.2 million metric tons of EU carbon-dioxide allowances for 13.38 euros ($18.67) a metric ton, according to data compiled by Bloomberg, which provided the auction platform. EU permits closed at 13.24 euros a ton yesterday on the BlueNext spot exchange in Paris, and were at 13.45 euros as of 1:58 p.m. local time today.

Governments in the EU’s greenhouse-gas trading program, the world’s largest, have handed out most permits for free to about 11,000 factories and power plants. Some nations are selling as many as 10 percent of their allowances for the five-year trading phase through 2012. Prices have risen 4.2 percent this week.

“Clearly the bullish drive is better than a few million tons at auction,” which boosted supply, said Seb Walhain, head of environmental markets at Amsterdam-based Fortis Bank Netherlands Holding NV. Carbon prices are “good value” for traders looking through 2013, and some factories with spare allowances don’t want to sell at current levels, he said today.

In the previous three British auctions, sale prices were in a range of 14 cents to 46 cents below the previous day’s close. The U.K. held its first auction of 2008-2012 permits on Nov. 19.

Today’s sale received total bids for 21.9 million tons, according to the U.K. Debt Management Office, which ran the auction.

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

Last Updated: July 9, 2009 08:12 EDT

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