EU Carbon Advances for First Year in Three as Economy Recovers
2010-12-31 13:44:38.328 GMT
By Ewa Krukowska
Dec. 31 (Bloomberg) -- European Union carbon permits
snapped two consecutive years of decline amid signs the region's
economy is recovering from recession.
Allowances for December 2011 delivery in the world's
biggest cap-and-trade program gained 8.3 percent this year after
falling 23 percent last year and 29 percent in 2008. They traded
at 14.24 euros a metric ton today on London's ICE Futures Europe
"The economic recovery is definitely the main reason for
the increase," said Roman Richter, a trader at UniCredit SpA's
Carbon Solutions group in Munich. "More and more industrial
consumers are also taking into account that they will have to
buy permits at auctions after 2012, so we are bullish about the
price in coming years."
The 27-nation EU, which gave away the majority of permits
since it started its emissions trading system, or ETS, in 2005,
will require most emitters to purchase their allotment of
allowances when the second trading period ends in 2012.
The bloc will auction about 60 percent of all CO2 permits
in 2013, according to estimates by the European Commission. That
proportion will increase in coming years.
The cap for carbon-dioxide discharges for that year has
been set at 2.04 billion tons, including aluminum and chemical
makers joining the program in its third phase, which runs from
2013 to 2020. This would be worth around 29 billion euros at
today's prices. Airlines become part of the program in 2012.
Few Bright Patches
Still, the current five-year trading period is likely to
remain oversupplied until it ends in 2012, according to
Alessandro Vitelli, an analyst at IDEAcarbon in London.
"This year has been the most stable we had in a long time
and it may continue next year," Vitelli said. "The economic
outlook for 2011 doesn't seem to show too many bright patches.
For the EU ETS there will be a whole series of regulatory
changes and people will keep looking how to extract the most
value from their freely allocated permits."
Amid a sovereign debt crisis, governments across Europe are
stepping up austerity measures to tackle deficits, making it
harder for some nations to emerge from recession. Economic
growth in the euro region may weaken to about 1.4 percent in
2011 from about 1.6 percent in 2010, according to the European
Central Bank's latest projections.
EU member states may decide as early as in January whether
to back a proposal by the European Commission, the bloc's
regulator, to prevent imported emissions credits linked to
certain industrial gases from the use for compliance in the
European cap-and-trade program from the beginning of 2013.
The commission proposed last month to ban United Nations-
sponsored offsets from projects that cut hydrofluorocarbon-23
and nitrous oxide from adipic acid production. Member states
need to approve the proposal before it can enter into force.
UN Certified Emission Reductions for delivery in December
2011 closed at 11.38 euros a metric ton yesterday, gaining 3.5
percent this year.
For Related News and Information:
Emission market news NI ECREDITS <GO>
Today's top energy stories ETOP <GO>
European power-markets home page EPWR <GO>
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--With assistance from Lars Paulsson in London. Editors: John
Buckley, Mike Anderson.
To contact the reporter on this story:
Ewa Krukowska in Warsaw at +48-22-433-44-70 or
To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or firstname.lastname@example.org