Carbon Rises as Bulgaria Signals Support for Market Fix Tomorrow

European Union carbon permits for December rose after Bulgaria, Luxembourg and the Czech Republic indicated they will back a mandate to start talks with the European Parliament on a plan to help boost emission prices.

The benchmark contract gained as much as 2.1 percent to 4.88 euros ($6.55) a metric ton on London’s ICE Futures Europe exchange. EU member states are almost certain tomorrow to adopt as their negotiating position the market fix as amended by the Parliament, according to Lithuania, which holds the bloc’s rotating presidency.

“I think most of the buying today has been from compliance companies looking to acquire allowances before they become any more expensive,” Krzysztof Piatek, a trader at Vertis Environmental Finance in Budapest, said by phone. “Speculators have probably already purchased ahead of tomorrow’s vote and are probably waiting for a further increase before adding to their positions.”

Prices fell to a record 2.46 euros a ton in April as a surplus of permits swelled to 1.8 billion tons, according to the European Commission, the bloc’s regulator. The measure as approved by the Parliament in July temporarily reduces supply sold at future auctions by 900 million tons and limits the planned intervention in the emissions market to a one-time move.

EU carbon permits for delivery in December closed 0.4 percent higher at 4.80 euros, extending their advance to 3.9 percent this week.

Single Act

Ambassadors from EU member states will probably decide about the mandate, which is needed to advance work on the emissions-market rescue plan, at around 10:30 a.m. Brussels time tomorrow, according to the presidency.

Bulgaria said today it won’t object to the proposal by Lithuania if there are no further changes to the text. The version of the market fix adopted by the Parliament doesn’t contradict Bulgaria’s position, under which a temporary delay in permit supply should remain a single act with a limited impact in the 2013-2020 period, said a government official, who asked not to be identified, citing policy.

Luxembourg will also back the mandate, a government official said. Other supporters of the market fix, known as backloading, include Germany, France, the U.K., Denmark, Finland and the Netherlands.

To block the proposal, opponents would need to muster 93 out of 352 government votes in the EU weighted-ballot system. Countries that were against backloading during previous meetings of diplomats in Brussels include Poland, Cyprus and Greece. Those three have a total 43 votes.

Spain, where the government hasn’t decided on backloading yet, has 27 votes. Abstentions count as votes against a measure in the EU system.

Should member states agree on the mandate, the next step will be to reconcile the final version of the measure with a representation of the European Parliament in negotiations that also involve the European Commission, known as trialogue. The outcome of those talks will require approval by the assembly and ministers from national governments before the backloading measure becomes law.

At the next stage, governments will decide on separate regulations setting out the details of the auction delays.

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