UN Emission Credits Fall to Record as Power Drops on Low Demand

United Nations Certified Emission Reductions dropped to their lowest ever as German power for 2013 fell to a record amid Europe’s continued debt crisis.

CERs for 2012 decreased 12 percent to close at 1.46 euros ($1.89) a metric ton on the ICE Futures Europe exchange in London. European Union allowances for December declined 1.8 percent to 7.69 euros, the lowest since Oct. 4. ICE handled 8.3 million tons of December CER trades as of 5:57 p.m., the most since Nov. 25 and the second highest ever.

CERs from developing nations including China are falling as emitters buy cheaper Emission Reduction Units from eastern European nations including Ukraine and Russia, Konrad Hanschmidt, an analyst at Bloomberg New Energy Finance in London, said today in an e-mailed research note.

Power utilities and factories are the biggest buyers of offsets because they cut the cost of compliance with the bloc’s carbon-reduction laws. German power and European coal slumped to their lowest for year-ahead contracts in two years. The 2013 power contract, a European benchmark, dropped as much as 40 cents to 46.90 euros a megawatt-hour, the lowest price for a year-ahead contract since November 2010, broker data show.

CERs for December 2013 lost 13 percent to close at a record 1.59 euros a ton. ERUs for December dropped 14 percent to a record 1.28 euros a ton.

The premium for December 2013 CERs over those for 2012 narrowed to a record as the offset futures dropped. The spread shrank 24 percent to 13 euro cents a ton.

The premium for December EU allowances over CERs widened 1 percent to a record 6.23 euros a ton.

To contact the reporter on this story: 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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