German Power, Carbon Permits Decline on Stagnating EU Economy

Nov. 7 (Bloomberg) -- German power for 2013 and carbon allowances slid as the European Commission said the euro-zone economy will expand 0.1 percent next year as the debt crisis ravages southern Europe.

German next-year baseload electricity, for supplies delivered around the clock, dropped 0.6 percent to 46.90 euros ($60) a megawatt-hour, according to broker data compiled by Bloomberg at 6:18 p.m. Berlin time.

Carbon for December fell 1.4 percent to 8.23 euros a metric ton on the ICE Futures Europe exchange. Electricity in Europe’s largest economy can track emissions prices, which affect production costs at plants that burn fossil fuels.

The 2013 power contract slid to a record 46.50 euros a megawatt-hour on Nov. 5 and has declined 16 percent in the past year. The commission is considering a temporary reduction of supply in the bloc’s carbon market, where prices have fallen 21 percent in 12 months, to fix a glut.

United Nations Certified Emission Reduction credits for December lost 7.3 percent to 1.01 euros a ton. The UN today issued the most CERs in more than six months, according to UN data compiled by Bloomberg.

The executive board of the UN’s Clean Development Mechanism, the body responsible for regulating CERs, delivered more than 6.3 million metric tons of credits to the market today, the UN data show. That’s an increase of 1.7 percent from yesterday and the biggest issuance in a single day since May 2.

EU carbon call options trading surged yesterday, according to data from ICE, where brokered contracts are cleared. There were 2.75 million tons of options to buy December EU carbon at prices as high as 14 euros a ton. There were 500,000 tons traded the previous day. Yesterday’s options to sell amounted to 1 million tons, the data show.

December carbon call options volume dropped to 200,000 tons today.

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