Feb. 11 (Bloomberg) -- European Union carbon prices dropped the most in three weeks after a German official said he expected a rescue plan for the region’s emissions market to start in the second quarter at the earliest.
The EU will probably not begin temporary curbs on supply of carbon permits this quarter, Juergen Landgrebe, head of the department for energy installations, aviation and economic aspects at the German Emissions Trading Authority, said in an interview today. The final decision on the timing of the plan is not in the hands of his organization, he said.
“It will probably start in the second quarter 2014 at the earliest,” Landgrebe said in Essen, Germany. “I don’t believe it can be done in March.”
The emergency fix for the carbon market can start after member states end scrutiny of the measure and market participants are notified about changes to the auction calendar, according to EU law. The final approval by governments is scheduled for Feb. 24.
The market fix envisages delaying, or backloading, the sale of 900 million carbon permits at government auctions between 2014 and 2016. It ties the volumes to be postponed this year to the starting date of the supply curbs, with 400 million allowances to be withheld if backloading begins in the first quarter and 300 million if it commences in the second.
The measure aims to help prices rebound from levels the European Commission, the bloc’s regulator, says fail to discourage burning fossil fuels. The cost of discharging one metric ton of carbon-dioxide has plunged about 80 percent since 2008 amid a glut of allowances, exacerbated by the economic slowdown.
EU emissions permits for delivery in December lost as much as 4 percent to 6.23 euros ($8.52) a metric ton today. They traded 1.9 percent down at 6.37 euros at the ICE Futures Europe exchange as of 3:58 p.m. in London.
The backloading plan was already approved by representatives of member states on Jan. 8 and awaits now the final sign-off by ministers after the European Parliament agreed to shorten its obligatory evaluation of the measure last week. EU Climate Commissioner Connie Hedegaard said on Feb. 6 on her Twitter account that “backloading can now start before the end of March.”
The European Commission’s climate department was not immediately available for comment today.
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