Feb. 16 (Bloomberg) -- European Union emission permits fell near a record after the United Nations said it expects a 50 percent jump in registrations for greenhouse-gas reduction projects this year, boosting the supply of credits.

EU carbon dioxide allowances for delivery in December dropped 22 cents, or 2.6 percent, to 8.41 euros ($10.74) a metric ton on London’s European Climate Exchange at 5:46 p.m. local time. The permits, which touched a record-low 8.05 euros on Feb. 12, rose as high as 9.45 euros earlier today.

UN credits can be used for compliance in the EU system, the world’s biggest greenhouse-gas market. Applications for registrations will probably climb to 1,000 from 666 last year, the UN’s Clean Development Mechanism Executive Board said in a report published Feb. 13. Proposals for issuances of so-called certified emission reduction credits may rise 55 percent to 800.

Companies have increased requests for credits as growing environmental awareness worldwide spurs tighter legislation. About 11,000 factories and power stations belong to the EU system.

The budget for the UN emissions market, which allows rich countries to invest in greenhouse-gas reduction projects in poor nations, was raised 31 percent this year to $28.5 million, according to the report. The number of employees needed for the UN Framework Convention on Climate Change’s larger caseload will jump to 137 from 93, it added.

UN certified emission reduction credits for December fell 2.4 percent to 7.70 euros a ton on ECX.

Switching Price

Prices in the EU program have plunged 73 percent from a two- year high in July on concern that a recession will slash demand for credits.

The so-called fuel-switching price of EU carbon dioxide permits needed to encourage power utilities to use clean-burning natural gas instead of coal dropped as low as 2.50 euros a ton last week from 7.16 a week earlier, analysts Francois Carre and Pierre Crucifix at Fortis Bank SA/NV in Brussels said today in an e-mailed research note.

“Even though carbon prices are not driven by fuel fundamentals at the present time, this very low switch level gives an incentive for utilities to switch from coal to gas to produce power during the next summer, which could put further downward pressure on prices,” they said.

Utilities need about half the number of permits when using gas instead of coal to generate power.

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

Last Updated: February 16, 2009 13:17 EST