EU Says 1.2 Billion Carbon-Permit Delay May Strongly Boost Price

A proposed delay of 900 million European Union carbon permits at auctions starting next year should lead to a more gradual build-up of surplus in the market and reduce the risk of price volatility, the EU said.

The European Commission, the bloc’s regulatory arm, also considered scenarios in which it postponed auctions of 1.2 billion or 400 million allowances, it said in a document published in Brussels today. The commission has also published a report on long-term options to strengthen the carbon market.

While the first would increase the risk of “significant upward pressure” at the start of the next trading period starting in 2013 and a corresponding decline later, the second would fail to sufficiently rebalance supply and demand at the start of the next phase, the commission said.

To contact the reporter on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net

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