UN CER Value to Shrink to 30% of EU Permits: Jefferies

Aug. 22 (Bloomberg) -- The value of United Nations Certified Emission Reduction credits will be 30 percent of European Union carbon allowances by the end of the year, compared with 38 percent currently, said Jefferies Group Inc.

UN Emission Reduction Units will be 25 percent of the value of EU permits by Dec. 31, compared with 34 percent now, Matthew Gray, an analyst at Jefferies in London, forecast yesterday in an e-mailed research note.

The discount for both UN offset types will widen on higher supply of ERUs and because traders will swap more expensive CERs for ERUs, the investment bank said.

The discount for CERs compared with EU permits for December widened yesterday to the most since May 31 last year, as the European permits advanced to their highest in more than five weeks. The spread widened as much as 6.2 percent to 5 euros a metric ton on the ICE Futures Europe exchange in London and had narrowed to 4.90 euros today as of 12:42 p.m.

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