UN Emission Offsets Plunge to Record as EU Carbon Erases Gains

United Nations Certified Emission Reduction credits for December declined to a record as greenhouse-gas cutting projects in developing countries boosted their requests for supply near all-time highs.

CERs dropped 9.6 percent to close at 1.42 euros ($1.86) a metric ton on the ICE Futures Europe exchange in London, an all- time low. The contract earlier fell as much as 12 percent to 1.38 euros. They’ve lost 80 percent in the past year.

Projects were requesting 48 million tons of CERs over the four weeks to Nov. 16, according to data published on the website of the UN Framework Convention on Climate Change in Bonn. That’s almost as much as the record new supply for any calendar month, which was 50.2 million tons in January last year, according to data compiled by Bloomberg.

EU carbon for December fell 2.4 percent to close at 8.08 euros a ton, the biggest decline since Oct. 3, after gaining 3.5 percent yesterday. The level at 8.04 euros a ton is a 23.4 percent Fibonacci retracement level of the low on July 31 of 6.53 euros and the high of 8.50 euros on Sept. 10.

Fibonacci analysis is based on the theory that securities tend to rise or fall by specific percentages after reaching a high or low.

EU permits have jumped 35 percent since reaching a record low of 5.99 euros on April 4.

Carbon will probably drop below 8 euros a metric ton, because gains driven by information about the economy probably won’t be sustained, Deutsche Bank AG said today.

“Price level seems to be driven by recent macro-economic data,” Isabelle Curien, an analyst in Paris, said by e-mail. “Levels below 8 euros could quickly be seen.”

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