European Carbon Has Longest Weekly Losing Streak Since February

  • Allowances drop as profit from burning coal declines
  • Brexit seen hurting economic output, driving commodities down

European Union carbon allowances fell 1.1 percent in the longest weekly falling streak since February as the profit from burning coal for power in Germany slumped to near a five-year low.

The earnings from burning coal dropped as the fuel’s price advanced faster than natural gas, prompting some utilities to favor the cleaner-burning fuel, Anatoly Stolbov, a trader at Virtuse Energy s.r.o. in Prague, said by phone. “We’ve seen coal go up, while gas stays relatively stable.”

Emission permits declined as commodity markets fell amid speculation that the U.K. decision to leave the EU may crimp economic production. Crude oil dropped 7.9 percent this week, the most since January 15. Britain is the second-biggest emitter in the EU and will decide whether to continue in the region’s carbon market, the world’s biggest by traded volume.

December carbon allowances closed unchanged Friday at 4.58 euros ($5.05) a metric ton on the ICE Futures Europe exchange in London. The contracts dropped to 4.28 euros a ton July 1, the lowest since March 2014.

“At 4.50 euros, there doesn’t seem to be a lot of trust in the system,” Stolbov said, referring to the European Union’s emissions trading system.

The profit from burning coal for power one year ahead fell 20 percent to EU2.21 euros a megawatt hour this week, the most for the period since January 2011, according to a Bloomberg dark-spread calculator based on power, coal and carbon futures.

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