Carbon Permits Rise Most in 33 Months as EU Debt Concerns Ease

European Union carbon permits rose, snapping three days of decline, as negotiators worldwide started talks about post-2012 climate rules and euro-area leaders were said to boost efforts to fight the debt crisis.

EU permits for December advanced as much as 9.3 percent to 8.43 euros ($11.28) a metric ton, the biggest daily increase since Feb. 26, 2009, and were at 8.34 euros as of 2:11 p.m. on London’s ICE Futures Europe exchange.

The contract lost 18 percent last week after slumping to a record low of 6.90 euros on concern that sales of allowances from a special EU reserve will increase oversupply at a time when the United Nations talks risk a lapse in emission-reduction targets under the Kyoto Protocol.

“We‘re seeing people covering short positions,” Thomas Rassmuson, partner at London-based CF Partners (U.K.) LLP, an adviser, trading and investment company focused on energy and environmental markets, said by telephone. “These are attractive levels for compliance buyers to come in and lock in prices to cover future needs and in the first quarter of each year carbon prices tend to rise.”

“Obviously the European debt situation has and will have implications on the carbon market,” he said.

Euro-area finance ministers will meet in Brussels tomorrow as governments bid to regain the confidence of financial markets. German Finance Minister Wolfgang Schaeuble in an interview with ARD television in Berlin urged fast-track treaty changes to tighten budget discipline, and Welt am Sonntag reported Chancellor Angela Merkel and French President Nicolas Sarkozy are planning a stability pact.

‘Last Chance’

UN Certified Emission Reduction credits for December advanced 8.5 percent to 5.75 euros a metric ton, after falling to a record 4.53 euros last week.

Climate envoys from more than 190 countries today started discussing the architecture of a new deal for when pollution limits for developed nations expire in 2012. The talks in Durban, South Africa, are the “last chance” to extend the Kyoto targets, according to Niklas Hoehne, director for energy and climate policy at Ecofys, a Dutch consultant that has the EU among its clients.

Investors and emitters in the EU emissions trading system are also awaiting details on sales of as many as 300 million post-2012 permits that may begin this year. The allowances will be monetized by the European Investment Bank.

The commission said it will transfer the permits to the EIB “swiftly” after a regulation that enables the delivery enters into force following its publication this week. The Luxembourg- based bank is then due to start sales within a month from the delivery.

To contact the reporters on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net; Catherine Airlie in London at cairlie@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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