EU Carbon Permits Snap Three Days of Gains to End Week Stable

European Union carbon permits fell for the first time in four days to end the week little changed as the premium of the next-year contract dropped to a record.

EU Allowances for December closed down 2.9 percent at 7.46 euros ($9.69) a metric ton on London’s ICE Futures Europe exchange, a drop of 1 euro cent on the week. That’s the smallest weekly move since the week ending Jan. 21, 2011.

Governments met on Sept. 19 to discuss a European Commission proposal to reconfirm its legal right to curb an excess of carbon permits as of 2013. While no decisions were reached at the meeting of the Climate Change Committee, the Netherlands, Poland, Slovakia and the Czech Republic all voiced reservations over the plan.

“The outlook for EUA prices is now more than ever a function of political optionality,” Isabelle Curien, an analyst at Deutsche Bank AG in Paris, said in an e-mailed report.

The premium for 2013 EU permits over those for 2012 narrowed as much as 5.4 percent to 35 euro cents, and closed at 36 euro cents.

Open interest in 2013 EU allowance futures gained 2.8 percent to 382 million tons as of yesterday. The contract now has the largest open interest of any carbon futures contract.

United Nations carbon credits for December rose as much as 6 percent to 1.94 euros, the highest in more than a week, as the weekly supply of offsets dropped 44 percent. September may see the least supply of new credits since February 2011, according to data on the UN website.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE