EU Carbon Allowances Head for Biggest Two-Week Gain Since August

European Union carbon permits headed for their biggest two-week gain since August, as nations weigh intervening in the market and natural gas and power contracts advanced.

EU allowances for December rose 7.6 percent to 4.52 euros a metric ton, taking the weekly increase to 4.2 percent, according to data from ICE Futures Europe in London. They rose 5.6 percent last week. United Nations Certified Emission Reduction credits for December were unchanged at 33 cents at 12:15 p.m.

The EU rescue plan to temporarily limit supply of allowances in the carbon market is increasingly likely to win majority support from the European Parliament’s environment committee, Matthias Groote, chairman of the European Parliament’s environment committee, said yesterday. The EU draft strategy to support the carbon market has divided governments, industry organizations and members of the Parliament.

German power for 2014 rose 1.3 percent to 42.25 euros a megawatt-hour, according to broker prices compiled by Bloomberg. U.K. gas for the six months through September advanced 0.7 percent on ICE, extending the contract’s gain since June 22 to 15 percent.

Carbon sometimes tracks natural gas prices as rising costs boost the appeal of other fuels such as dirtier coal, which requires twice the amount of emission allowances to burn than gas. Higher power prices also increase the incentive for utilities to sell forward and hedge by buying fuel and carbon contracts.

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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