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UN 2010-2011 Carbon-Emissions Spread Widens to Record 92 Euro Cents a Ton
The premium of United Nations emission credits for delivery in 2010 over 2012 surged to a record as regulators scrutinized the issuance of new credits.
The spread, traded as a separate contract on the European Climate Exchange in London, jumped 9.5 percent to 92 euro cents ($1.17) a metric ton. UN-overseen regulators are reviewing supply of credits to projects that destroy hydrofluorocarbon-23 gas. Four such projects are waiting this month to hear if their requests for issuance face delay, according to a UN website that tracks projects.
Some traders may be buying back 2010 futures because they no longer expect issuance and don’t need their previously made hedge, Andrew Ager, the London head of carbon and emissions at Prudential Financial Inc.’s Bache Commodities Ltd., said in an e-mail. They then sell 2011 futures to “roll” the hedge forward, he said. “It is one way of not realizing a loss and of moving the position across, but at a cost.”
The spread has widened from 21 cents at the end of July as the Clean Development Mechanism executive board based in Bonn delays issuances to HFC-23 projects as they conduct reviews. Credits that destroy that gas make up about half the supply in the UN CDM market.
UN credits for December rose 1.3 percent to 14.15 euros a ton as of 5:33 p.m. in London. EU allowances for December advanced 0.2 percent to 15.75 euros. The premium of 2010 EU allowances to UN credits narrowed by 8.6 percent to 1.60 euros, the smallest gap since Aug. 19.
To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net Catherine Airlie at cairlie@bloomberg.net
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