EU Carbon Allowances Post Biggest Weekly Drop in Five Months
European Union carbon permits had their biggest weekly decline since May 10 after the European Investment Bank said it will sell allowances from the 28-nation bloc’s reserves.
Carbon for December dropped 3.1 percent today to close at 4.62 euros ($6.25) a metric ton on the ICE Futures Europe exchange in London, the seventh decline and the longest daily losing streak since July 2012. The contract fell 9.6 percent this week.
The EIB in Brussels said Oct. 8 it will start selling in November 100 million tons of allowances from a reserve set aside for new entrants to the EU’s emissions trading system, equivalent to about 5 percent of annual supply. That will start hitting the market just as the EU may begin handing out its allocation of free permits for 2013, U.K. government data show.
“The combination of these two could be quite significant,” Matteo Mazzoni, an analyst at NE Nomisma Energia Srl in Bologna, Italy, said by phone today. The impact from the EIB sales may be “yet to come.”
Carbon has fallen in the last quarter of each of the past five years. Unless EU policymakers make progress on fixing a surplus of permits, the price may decline below 4 euros by the end of the year, Mazzoni said.
United Nations Certified Emission Reductions for December dropped 3.6 percent today to close at 53 euro cents a ton, the third weekly decline. Emission Reduction Units for December climbed 6.7 percent to 32 cents a ton, the first gain since Oct. 2.
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