(BN) EU Carbon Rises Most in Three Weeks as German Power

sorry sent the previous one twice accidently


EU Carbon Rises Most in Three Weeks as German Power Advances
2010-11-10 16:57:53.532 GMT

By Mathew Carr and Ewa Krukowska
Nov. 10 (Bloomberg) -- European Union carbon-dioxide
allowances jumped the most in almost three weeks as German power
rose, boosting potential profit from forward-electricity sales.
EU permits for December gained as much as 1.7 percent, the
biggest intraday increase since Oct. 22, and traded up 1.2
percent up at 14.47 euros ($19.84) a metric ton as of 4:40 p.m.
on London's European Climate Exchange. They regained ground
after falling yesterday to the low price in almost three months.
"I would call this a technical rebound in carbon prices as
power recovers," said Emmanuel Fages, an analyst at Orbeo in
Paris. "There's a strong support at 14.30 euros. Still, the
increase may be temporary as the fundamental outlook until next
week continues to look bearish."
German power for settlement next year rose 20 cents to
46.80 euros a megawatt-hour, recovering from a seven-month low
yesterday, according to data compiled by Bloomberg. Fages said
it may stay under pressure on ample capacity in the coming days.
EU carbon allowances for December 2011 traded 1.4 percent
higher at 14.80 euros, and permits for delivery in December 2012
advanced 1.5 percent to 15.31 euros.
The EU regulator said yesterday it plans to sell by the end
of 2012 all 300 million allowances from a reserve for the next
trading period starting in 2013 to help finance investment in
carbon capture and storage projects and renewable energy
The sale of the permits represents about 15 percent of an
average annual cap in the current phase, which runs from 2008
through 2012 phase. It will start within a month of the
allowances being made available in a registry that the EU is
setting up, the European Commission said.

Bullish for 2011

According to EU law, the registry has to be operating at
the start of 2012, and the commission hasn't set a more specific
target for launching it, Peter Zapfel, head of policy co-
ordination in the climate department, said yesterday.
The probable concentration of selling in 2012 is bullish
for EU carbon prices in 2011 because the rising demand from
utilities hedging their power sales next year will leave the
market "increasingly short," according to analysts at
Bloomberg New Energy Finance.
European utilities, which often buy emissions allowances at
the same time they sell electricity forward, have signaled they
may need as many as 500 million permits for the 2013-2020
trading period at early auctions before the phase starts.

Broadly Balanced

"In contrast to 2011, where we forecast the net demand in
the secondary market to be around 190 million tons, we expect
that demand in 2012 could be closer to 80 million tons," New
Energy Finance said in an e-mailed note. "Given that at least
100 million tons of forward auctioning is also anticipated, most
of which is likely to be in 2012, the last year of phase two may
now broadly be in balance."
United Nations credits for December delivery rose 0.8
percent to 12.24 euros in London, extending their gain for the
year to 11 percent. The EU may limit UN offsets on investments
seen as "subsidizing" rivals in the steel and cement
industries, a trader at RWE AG told the Climate Finance 2010
conference in London today.
The EU, which runs the world's biggest cap-and-trade
program, plans to present a proposal later this month to
restrict UN credits from projects that cut some industrial gases
amid. The commission is concerns that they may create
significant windfall profits and undermine the environmental
integrity of the carbon market.
"By buying Certified Emission Reductions, you are actually
subsidizing industry," said Bjorn Struck, senior emissions
manager at the Geneva-based trading unit of RWE, Germany's
second-biggest utility. "I expect those will be next," he
said, referring to steel and cement.

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, Rob Verdonck

To contact the reporter on this story:
Mathew Carr in London at +44-20-7073-3531 or
Ewa Krukowska in Brussels at +32-2-237-4331 or

To contact the editor responsible for this story:
Stephen Voss on +44-20-7073-3520 or sev@bloomberg.net