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Carbon Glut Fueled by Generous EU Cap, Climate Mundial Says

Europe’s glut of emissions permits is the fault of regulators’ overgenerous allocation of the allowances, rather than the region’s economic slowdown, according to carbon-market adviser Climate Mundial Ltd.

U.K. companies won allowances for about 410,000 metric tons of carbon dioxide per 1 billion euros ($1.4 billion) of gross domestic product in 2010, or 47 percent more than needed under a 2005 European Union economic model that measures so-called carbon intensity, said Daniel Rossetto, a Climate Mundial director in London. Austria, Greece and Spain got at least 15 percent more permits in the five years through 2012 than the model indicated they would need, Rossetto said.