Carbon Has Biggest Weekly Fall Since January Amid Surplus Debate
European Union carbon permits posted their biggest weekly drop since January as nations and other policy makers considered a plan to temporarily remove supply from the market.
EU carbon for December fell 11 percent this week to close at 3.78 euros ($4.94) a metric ton on the ICE Futures Europe exchange in London. The benchmark contract rose 2.2 percent today.
Carbon fell to a six-week low on March 13 after German Environment Minister Peter Altmaier said the country will decide on its position to a plan to delay the sale of some carbon permits only after the European Parliament votes on the measure in mid-April. The bloc is considering draft amendments that would enable postponing sales of 900 million carbon allowances to support prices, a strategy known as backloading.
Altmaier’s comments may have prompted some traders to lose confidence in the prospect of backloading being agreed within a month, said Louis Redshaw, head of carbon and coal for Barclays Plc in London. “It may have accelerated some of the selling, decelerated some buying,” he said in a phone interview.
Carbon may fall back to the 3.22 euro level while the backloading debate continues, he said.
EU permits for December rose as much as 20 percent yesterday after the European Parliament approved a non-binding recommendation for regulators to tackle oversupply of carbon permits in the world’s biggest market.
“You’re creating volatility by backloading,” Redshaw said. “The market, on the whole, should be left alone. Tightening targets is much more credible.”
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