UN Emission Credits Have Biggest Drop as Volume Surges to Record

United Nations Certified Emission Reduction credits for December had their biggest monthly drop, prompting record volumes on the ICE Futures Europe exchange in London.

CERs for December settlement dropped 46 percent this month to 1.17 euros ($1.52) a metric ton on ICE. Today’s 14 percent jump was the biggest this year. Volumes across all offset futures rose to more than 200 million tons in October, a record according to ICE data. The previous high was 164 million tons in August last year.

CER prices fell to an all-time low of 71 euro cents a ton on Oct. 25, as projects in developing nations requested near- record levels of new offsets and demand in Europe remained muted by low levels of economic production. Supplies of Emission Reduction Units from nations including Russia and Ukraine have also advanced.

The Clean Development Mechanism that creates CERs may still help meet demand from new carbon markets after the expiry this year of Kyoto Protocol emission-reduction targets, said Albrecht von Ruffer, managing director of Hamburg-based N.serve Environmental Services GmbH, which manages emissions-cutting projects under the CDM.

“There are possibilities for upside,” von Ruffer said today by phone. “We still see that the CDM can be the link between carbon markets around the world. We’re very far from it.”

Von Ruffer said he owns CERs and European Union carbon permits and expects them to rise in value.

“We haven’t given up hope entirely,” he said.

EU permits for December advanced 1.1 percent today to close at 8.24 euros a ton, the highest since Oct. 17. That increase took their monthly gain to 3.5 percent.

Emission Reduction Units for the same month rose 17 percent today to 90 euro cents a ton, limiting their monthly plunge to 55 percent. That’s still their worst ever performance in a single month. ERU volumes across all futures on ICE jumped to a record of at least 76 million tons.

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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