European Union carbon-dioxide permits dropped to a five-day low as oil prices declined and the U.S. Senate passed a measure that would effectively shield the country’s airlines from the EU emissions limits.
EU permits for delivery in December fell as much as 2 percent, the biggest decline since Sept. 19, and traded at 7.34 euros ($9.51) a metric ton, down 1.6 percent, on the ICE Futures Europe exchange as of 8:40 a.m. in London.
The Senate bill, which passed on Sept. 22 and must be reconciled with similar legislation passed by the House last year, would bar U.S. airlines from participating in the EU emissions trading system, or the ETS. While Transportation Secretary Ray LaHood said the Obama administration has not taken a position on the bill, in June he said the government “strongly opposes” the EU plan.
The 27-nation EU decided in 2008 to include flights to and from European airports in the ETS from 2012. International airlines have to surrender EU or United Nations emission permits against this year’s emissions by April 2013. Banning U.S. airlines from complying with the ETS may mean that fewer airlines buy permits, creating an excess of supply.
Brent crude for November delivery lost 0.8 percent to $110.55 a barrel on ICE Futures Europe as concern that European debt-crisis talks will falter and threaten the economic recovery outweighed speculation tension in the Middle East will disrupt crude supplies.
Oil can affect carbon prices because it’s linked to economic output and to cleaner-burning natural gas costs in Europe.
United Nations credits for December fell 1.6 percent to 1.85 euros. The contract sank to a record low of 1.43 euros on Sept. 18.
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