EU Nations to Sell 124 Million Carbon Permits, Tschach Says

Jan. 16 (Bloomberg) -- European Union nations will sell 124 million metric tons of surplus carbon allowances originally set aside for new entrants during the next 15 months, Tschach Solutions GmbH estimated.

Of a total surplus of 220 million tons in the five years through 2012, 124 million will be sold, 20 million will go to new entrants and the remaining 76 million tons will be canceled, Tschach Solutions in Karlsruhe, Germany, predicted in a Jan. 12 report e-mailed today.

Germany and the U.K. may be forced to cancel at least some of their new-entrant allowances because of rules that limit sales to 10 percent of a nation’s cap in the five years, Ingo Tschach, managing director, said today by phone. Tschach Solutions, which sells analysis on carbon and energy markets, estimated Germany will probably be required to make 55 million tons of the cancellations, while the U.K., which is already selling from its reserve, may need to cancel 4 million.

The European Investment Bank, which is selling at least 200 million 2013 carbon allowances on behalf of the EU through Oct. 2 from a regional new-entrant reserve, offloaded its first 12 million last month. EU carbon permits for December this year dropped to a record 6.38 euros ($8.08) a metric ton on Jan. 4 because of surging supply and as demand is reduced by the euro area’s sovereign-debt crisis.

They fell 3.9 percent today to 6.72 euros a ton on ICE Futures Europe in London as of 10:50 a.m. local time.

In Germany, “new coal-power stations are severely delayed and this reduces demand for new-entrant reserves significantly,” Tschach said today in the interview.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net