EU Carbon Permits Head for Biggest Monthly Gain Since April on UN Offsets

European Union carbon permits are poised to post their steepest monthly gain since April as supplies of United Nations’ offsets have been halted while the UN Executive Board reviews HFC-23 destruction projects.

EU permits for December slipped 8 cents to 15.38 euros ($19.50) a metric ton at 10:45 a.m. on London’s European Climate Exchange. The contract has gained 8.6 percent this month, the biggest increase since April.

Carbon permits have risen on concern of “massive supply cuts” from the UN’s review of HFC-23 reduction projects, Emmanuel Fages, a Paris-based analyst with Orbeo, the carbon- trading venture of Societe Generale SA and Rhodia SA, said in an e-mailed report late yesterday. “We expect this dynamic to continue during the coming week, and possibly later, as the larger market participants return from the summer break and take the new fundamental situation into account.”

EU permits to emit 1.75 million tons of carbon dioxide have traded on ECX so far this month, almost 35 percent less than volumes bought and sold in July.

European power stations and factories can use UN offsets to meet emissions caps. A cut or delay in the issuance of credits may raise demand for EU permits.

The spread between EU permits and United Nations Certified Emission Reductions for December widened 1 percent to 1.94 euros a ton. The spread, traded as a separate contract on ECX, has risen from 1.55 euros since Aug. 19 after regulators said they are reviewing projects that reduce hydrofluorocarbons, fueling speculation that the supply of credits will plunge.

To contact the reporter on this story: Catherine Airlie in London at cairlie@bloomberg.net

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