By Ewa Krukowska
July 23 (Bloomberg) -- European Union carbon permits were poised to fall a fifth consecutive week, heading for the longest weekly losing streak since October as German power prices fell and U.S. lawmakers backed away from plans to start a cap-and-trade program.
EU permits for December declined 1.3 percent to 14.07 euros a metric ton as of 3:40 p.m. on London's European Climate Exchange. They dropped 1.3 percent in the week, reducing this year's gain to 13 percent.
Carbon allowances were below their 100-day moving average of 14.60 euros. Volumes shrank and may decline further in coming days due as traders take vacations, according to UniCredit SpA's Carbon Solutions Team.
``It is worth noting that the support line at 13.80 euros per ton has remained firm,'' UniCredit said in an e-mailed note. ``Utilities are stocking up on emissions allowances at prices below 14 euros. By contrast, industrial companies are still hesitant to buy allowances to cover their future needs.''
German baseload power for next year, the European benchmark, declined 1.1 percent to 49.8 euros a megawatt-hour, according to broker prices on Bloomberg. The contract was poised for a fourth weekly decline in a row. Lower power prices can reduce the incentive to sell electricity forward, curbing demand for emission permits.
``For the coming seven trading days we expect the sideways trend to continue in a range between 13.80 euros and 14.70 euros,'' UniCredit said.
EU emissions trading system, started in 2005 to help fight climate change, is the world's largest cap-and-trade program, covering about 12,000 installations. Emitters must have an allowance for each ton of carbon dioxide they emit in burning fossil fuels. Those producing more than their allowance must buy more; those that emit less can sell their surplus.
U.S. Senate Democrats won't include carbon dioxide limits for power plants or a renewable electricity mandate in energy legislation to be taken up as early as next week, Senate Majority Leader Harry Reid said yesterday.
The legislation will deal with offshore oil and gas drilling regulations, energy-efficiency programs, and incentives for natural gas-fueled vehicles, Reid, a Nevada Democrat, told reporters in Washington.
For Related News and Information:
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--Editors: Mike Anderson.
To contact the reporter on this story:
Ewa Krukowska in Warsaw at +32-474-620-243 or
ekrukowska@bloomberg.net;
To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or sev@bloomberg.net
