(BN) Carbon Diverges From Fossil Fuels on Oversupply, Barclays Says


Carbon Diverges From Fossil Fuels on Oversupply, Barclays Says
2011-01-17 15:38:05.278 GMT

By Mathew Carr
Jan. 17 (Bloomberg) -- European Union carbon prices have
diverged from power, natural gas and coal prices because the
economic recession has made the market oversupplied, said
Barclays Plc.
"EU allowances are now not consistently correlating with
key fossil fuels and periods of temporary high correlation are
more coincidence than cause," analysts including London-based
Trevor Sikorski said in an e-mailed report dated today. "This
state of affairs should continue until the market tightens to a
point when fuel switching becomes needed to balance the
Prices move mainly when there's an imbalance between
factories, which are selling spare permits, and power utilities,
which need to fill shortages, Barclays said. "Carbon-market
dynamics have become much more about when industrial
participants are selling against when utilities are buying."

For Related News and Information:
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Today's top energy stories ETOP <GO>
European power-markets home page EPWR <GO>
Sustainability, environmental indexes SEI <GO>

--Editors: Alex Devine, Jonas Bergman.

To contact the reporter on this story:
Mathew Carr in London at +44-20-7073-3531 or

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