EU Carbon Declines as Poland’s Auction Debut Set to Boost Supply
European Union carbon permits dropped a second day as Poland prepared to auction allowances for the first time and German power prices fell.
December permits fell as much as 3.7 percent to 4.96 euros ($6.58) a metric ton and were trading at 5 euros at 9:22 a.m. on the ICE Futures Europe exchange in London. Carbon jumped to as high as 5.56 euros on Sept. 9, the highest since January, as the EU regulator cut the free permits handed out to industry.
Poland, the European Union’s third-biggest emitter after Germany and the U.K., will auction 51 million tons of permits this year in weekly sales starting Sept. 16, according to the European Energy Exchange AG in Leipzig, Germany. The auctions will boost the amount of allowances sold this month to 80.3 million tons from 33.6 million in August, EEX and ICE data show.
The German front-year electricity contract declined for the third day, dropping as much as 0.7 percent to 38.25 euros a megawatt hour, according to data from brokers. Power is linked to the price of emissions, which affects production costs.
“We expect the price of EU allowances to react primarily to signals from the power market in the upcoming weeks,” Kathrin Goretzki, an analyst at UniCredit SpA (UCG) in Munich, said in note yesterday. “As we do not anticipate a sustainable increase in power prices any time soon, we think that the carbon price will also likely give up some of its recent gains.”
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