EU Carbon Rises to Five-Month High Before Regulatory Decisions
European Union carbon rose to its highest price in almost five months before regulatory decisions scheduled this month affecting the supply of permits. Natural gas advanced to a two year high.
Carbon allowances for December rose 2.4 percent to 15.82 euros ($22.11) a metric ton, the highest since Oct. 14, on the ICE Futures Europe exchange in London, extending 2011’s gain to 11 percent. They earlier traded as high as 15.85 euros.
U.K. natural gas for delivery over the coming summer, the six months from April, rose 2 percent to 56.88 pence a therm amid concern unrest in Libya will spread over northern Africa, disrupting fuel supplies. Higher gas prices can prompt utilities to switch to burning coal for power generation. Coal emits about twice as much carbon-dioxide as natural gas and so requires more permits.
The European Commission in Brussels will announce a decision on March 7 that will set a cap for airlines entering the emissions-trading program starting in 2012, according to a statement published today on the regulator’s website.
The aviation announcement expected on Monday “may have focused minds on the extent of additional demand that will come into the market,” Alessandro Vitelli, director of strategy at IDEAcarbon in London, said today by e-mail. “The EU allowance market has been climbing in a rather ‘stop-start’ fashion since the end of December.”
EU Climate Commissioner Connie Hedegaard said officials will announce within two weeks the number of permits that will initially be sold for the third phase of the trading program, which runs from 2013 through 2020. She spoke to reporters today in Madrid .
Holding back some permits starting in 2013 would help produce a carbon price that encourages cleaner-energy technologies, Hedegaard told reporters on Feb. 28.
The commission, the bloc’s regulator, will propose setting aside from 500 million to 800 million carbon allowances in the eight-year period through 2020, according to a draft document to be published March 8. The reserve would amount to about 5 percent of the greenhouse-gas limits the EU set for energy and manufacturing companies in the next phase of its cap-and-trade program, the world’s largest.
The spread between EU permits and United Nations offsets for December delivery, traded as a separate contract on ICE, widened by 28 cents to 3.90 euros a metric ton, its widest level since the contracts began trading, exchange data compiled by Bloomberg show.
To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
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