EU Carbon Plunges as Lawmakers Drop Plan for Supply-Fix Shortcut

Carbon permits had their biggest one-day drop in a month after the chairman of the European Union’s environment panel abandoned seeking fast-track talks on a plan to reduce a surplus of allowances.

EU carbon for December declined 12 percent to close at 4.57 euros ($6.02) a metric ton on London’s ICE Futures Europe exchange, the biggest decline since Jan. 23. February United Nations Certified Emission Reduction credits were unchanged at 14 euro cents a ton.

The EU contracts have surged 63 percent from a record-low 2.81 euros on Jan. 24 as politicians debate a European Commission proposal to support prices by holding back 900 million tons of new permits in a strategy known as backloading.

The European Parliament’s environment committee backed a version of the proposed law change on Feb. 19. The panel’s Chairman Matthias Groote said today that he won’t pursue talks with member states on the measure before a plenary session of parliament votes on it in April, delaying any implementation.

“We will vote in plenary,” Groote said in a text message. “I’ll stick to the timetable and we will get backloading.”

The delay probably means carbon will drop below 4 euros a ton, according to Konrad Hanschmidt, an analyst in London for Bloomberg New Energy Finance.

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