June Carbon Premium Widens to Record After ICE Installs Deadline

The premium for June European Union carbon permits over those for March widened to a record after the ICE Futures Europe exchange said it would not accept Phase 2 allowances for delivery into futures contracts after April.

“Phase 2 EUAs will not be acceptable for delivery into the May 2013 and subsequent futures contracts,” the London-based exchange said in a statement posted on its website today.

Phase 2 permits, known as EUAs, may be used by factories and power stations for compliance with their 2012 targets until the final deadline of April 30. Phase 3 of the bloc’s cap-and- trade system begins in January and runs through 2020.

The premium for June 2013 permits over those for March widened as much as 21 percent to a record 29 euro cents ($0.36) a metric ton on ICE and closed at a 27 cents. The December 2012 contract, the benchmark, dropped 2.2 percent today to 7.49 euros a ton, more than reversing yesterday’s 2.1 percent advance.

The first Phase 3 futures contract will be for delivery in May 2013, Claire Miller, a spokeswoman for ICE Futures, said in an e-mailed response to questions.

Futures contracts for aviation allowances for airlines covered by the EU’s market in 2012 will also run to April, ICE Futures said. The first Phase 3 contract for EU aviation permits will be for delivery in December 2013, the bourse said.

The EU will exchange emitters’ surplus Phase 2 permits for Phase 3 allowances no later than the end of June, according to a European Commission document published on its website. It’s unclear when the conversion of Phase 2 allowances will begin.

United Nations Certified Emission Reduction credits for December dropped 5.6 percent today to close at 2.85 euros.

To contact the reporters on this story: Alessandro Vitelli in London at avitelli1@bloomberg.net; Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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