EU Carbon Plunges 10% as Traders Sell Before Parliament Vote

European Union carbon permits fell the most in more than six weeks as traders sold before the bloc’s parliament meets next week to vote on a proposal to enable temporary withholding of permits.

December allowance futures dropped as much as 11 percent to 4.26 euros (5.56) a metric ton on London’s ICE Futures Europe exchange, the lowest since March 22. They’ve declined by 17 percent in the last two days. The benchmark contract closed down 10 percent at 4.30 euros a ton.

The European Parliament is scheduled to discuss during a plenary meeting on April 15 a proposal by the European Commission to enable delaying the sale of 900 million permits in an effort to boost the price of allowances. A vote on the plan is scheduled to be held April 16, according to the Parliament’s preliminary agenda.

More than 31 million December contracts were handled on ICE Futures, the most since March 21, according to ICE data.

“The market has become increasingly nervous about the strong statements by the anti-backloading block,” Milan Hudak, an analyst in Prague at Virtuse Energy sro, said by e-mail. “The politics of the European Parliament is hard to read and therefore the market responded nervously to any negative news.”

The result of next week’s vote is too close to call, Per Lekander, an analyst in Paris at UBS AG, said in an e-mailed report.

“If the members vote exactly as they did in the previous vote we would end up with 365 for and 356 against back- loading,” Lekander said. “The vote is thus too close to call and could effectively be decided by the level of abstentions and absentees.”

United Nations Certified Emission Reductions fell 2 euro cents or 4.9% to 39 euro cents a ton.

To contact the reporter on this story: Alessandro Vitelli in London at avitelli1@bloomberg.net

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

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.