EU Carbon Permits Are Second-Fastest Rising Commodity

European Union carbon was the second-fastest-rising commodity this month after northwest European naphtha. United Nations emission credits dropped in August, as their discount widened to a record.

EU carbon allowances for December rose 5.1 percent to close at 8.08 euros ($10.15) a metric ton today on the ICE Futures Europe exchange in London, the biggest jump this month. They gained 16.6 percent in August, compared with naphtha’s 17.2 percent, according to a ranking of 80 commodities tracked by Bloomberg. United Nations emission credits dropped 0.7 percent.

EU allowances declined 16 percent last month and surged 30 percent in June, as the European Commission in Brussels considers intervening in the market to temporarily limit supply. The start of German auctions of permits for Phase 3 of the trading system, which begins next year, will probably be delayed until October this year from September, a government official said today.

“If there isn’t much Phase 3 supply available, it means utilities may buy shorter-term futures,” said Tom Greenwood, an analyst in London for Ideacarbon, which rates emission credits. Carbon also tracked crude oil and German power higher today, Greenwood said by phone. Brent crude advanced 8.9 percent for the month.

UN Certified Emission Reduction carbon offsets rebounded after reaching a record yesterday in intraday trading.

CERs for December jumped 7.3 percent today to 2.80 euros a ton. They yesterday fell as low as a record 2.50 euros a ton, after the Clean Development Mechanism Executive Board handed out 3.9 million tons of credits to industrial-gas-cutting projects that had previously been under review.

Australia said Aug. 28 it will allow its emitters to use international carbon instruments including EU permits for as much as half of their compliance needs, tightening the specific limit on UN offsets to 12.5 percent from 50 percent.

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