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Mathew Carr, emissions markets, energy reporter. London Bloomberg News ph +44 207 073 3531 yahoo ID carr_mathew
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EU Carbon May Fall to 14.20 Euros This Week, New Energy Says
2010-11-01 12:20:35.607 GMT
By Mathew Carr
Nov. 1 (Bloomberg) -- European Union carbon-dioxide
allowances may fall as much as 2.7 percent this week as a U.K.
auction adds to supply and lower German power prices weigh on
demand, Bloomberg New Energy Finance predicted.
"EU allowances are realigning with the German power
market, which has seen a drop in margins along with power prices
due to weak demand," said analysts including Clemens
Tummeltshammer in London at Bloomberg New Energy Finance, which
provides carbon-market research.
Permits for December, the benchmark, were little changed
today at 14.59 euros (20.33) after falling 5.1 percent last
month, according to data from the European Climate Exchange in
London. Prices may fall as low at 14.20 euros, or they could
rise as high as 15 euros a ton this week should power utilities
buy to hedge profit on forward electricity sales, New Energy
Finance said today in an e-mailed research note.
Coal prices are near their highest in a year, curbing use
of the fuel that requires twice as many carbon permits for
utilities compared with cleaner-burning gas. U.K. gas for next
summer has fallen 8.3 percent since June 30, making that a more
profitable fuel.
A potential oversupply in the power market this decade
could help lure factories with surplus emission allowances into
the carbon market, curbing prices, said Kris Voorspools,
director of 70Watt Capital Management, a Luxembourg-based hedge
fund that specializes in trading spreads in energy and CO2
markets. Holding allowances for use in future years is known as
"banking" them.
"I wouldn't at all be surprised if carbon goes tumbling
down once people come to realize that banking is maybe not that
smart after all," because prices may fall, Voorspools said
today by e-mail. "The oversupply in carbon will remain well
beyond 2020" unless the power market oversupply disappears, gas
prices jump or the EU tightens its 2020 emissions target, he
said.
For Related News and Information:
Top Power Stories: PTOP <GO>
Emissions-trading stories: NI ENVMARKET BN <GO>
Today's top energy news: ETOP <GO>
European power-markets home page: EPWR <GO>
--Editors: Mike Anderson, Jonas Bergman.
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 on +44-20-7073-3520 or sev@bloomberg.net
