EU Carbon Has Biggest Weekly Gain for Two Years as Gas Surges

  • Options trading rises to the most since January 2015
  • Gas rises on cooler temperatures and advancing crude oil

European Union carbon allowances had their biggest weekly gain since February 2014 as natural gas and crude oil advanced.

December allowances climbed 15 percent week-on-week as U.K. gas for next summer, a European benchmark, traded near the highest since July 2015. Gas was spurred by a weakening British pound and cooler-than-average weather. Generators burning the fuel need about half the emission permits of those using coal.

EU allowances advanced after Canada’s government said Monday it will set a minimum price for carbon pollution beginning in 2018 in a bid to meet its climate targets. The Paris climate accord, which sets up a framework for international emissions trading, was this week ratified by enough countries to go into force. On Thursday, United Nations envoys set up a global emissions market for airlines, the first for an industry.

EU allowances are still down 31 percent this year amid attempts to deal with an accumulated glut. Carbon fell 2.7 percent to close at 5.70 euros ($6.35) a metric ton on ICE Futures Europe in London on Friday.

Summer gas rose 7.9 percent week on week, while Brent crude advanced 5 percent. Nuclear reactor outages spurred carbon gains, alongside power and coal prices.

Weekly carbon options trading volumes jumped to the highest since January 2015. A record 3.7 million tons of options to buy permits at 9 euros a ton cleared on ICE.

In Canada, the government said it would impose a minimum federal price of C$10 ($7.53) per ton in 2018, rising by C$10 each year to C$50 per ton in 2022 when it will be reviewed.

“Businesses will have to find new ways to reduce emissions and pollute less,” Prime Minister Justin Trudeau told lawmakers. “That will also make our companies more competitive. The global economy is increasingly clean and Canada cannot allow itself to fall behind.”