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Premium for 2012 EU Carbon Nears the Narrowest in Three Years
2010-08-12 17:42:06.745 GMT
By Mathew Carr
Aug. 12 (Bloomberg) -- The premium for European Union
carbon allowances for 2012 versus 2010 fell to match the
narrowest level in more than three years on speculation that
slow economic growth may curb greenhouse gas output.
The spread for December 2012 EU allowances over the same
contract for 2010 fell 6.8 percent to 82 euro cents ($1.05) a
metric ton at 5:19 p.m. on the European Climate Exchange in
London. That would match its lowest close since Aug. 10, 2007.
It was earlier today as narrow as 81 cents.
Carbon allowances in the European Union's emissions-trading
system, the world's largest, were little changed as U.K. natural
gas and German electricity prices fell. RWE AG, the region's
biggest emitter, said a slowing economy might hurt its profit
margins from selling electricity "for years."
More Americans than forecast filed applications for
unemployment benefits last week, helping drive down crude oil
prices, said Paul Love, a market analyst in Dunfermline,
Scotland, for McKinnon & Clarke Ltd., which advises businesses
on energy markets. "The weak economic news in the U.S. has
pushed down the oil market."
Government job cuts in the U.K. are adding to concern that
Britain and some other EU nations could slip back into
recession, Love said today by phone. "What we are seeing today
is a big sell-off" in some month-ahead contracts, which has
also trimmed prices for longer-dated contracts.
German baseload power for next year fell 0.5 percent to
50.20 euros a megawatt-hour, its third straight decline,
according to broker prices compiled by Bloomberg. Front-month
U.K. gas fell 1.2 percent. Brent crude dropped 1.6 percent.
'May Deteriorate'
"If the economic situation were to deteriorate
unexpectedly, it would probably cause demand for our main
products -- electricity and gas -- to drop and prices to fall,"
RWE executives said today in an earnings report. "There is a
danger of our electricity margins being curtailed for years."
Lower power prices can reduce the incentive to sell
electricity forward, curbing demand for emission permits.
EU carbon permits for December rose 1 cent to 14.41 euros.
Allowances for 2012 fell 3 cents to 15.25 euros. Carbon isn't
falling as fast as other energy commodities because it's unclear
when the European Commission, the program's regulator in
Brussels, will hold the first auctions for the third phase,
which starts in 2013, Love said. Also, the EU may tighten its
emissions targets for 2020, he said. "The unknown is holding
the market up," he said.
For Related News and Information:
Emission market news NI ENVMARKET <GO>
Today's top energy stories ETOP <GO>
European power-markets home page EPWR <GO>
--Editors: Mike Anderson, Reed Landberg.
To contact the reporter on this story:
Mathew Carr in London at +44-20-7073-3531 or
m.carr@bloomberg.net
To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or sev@bloomberg.net
