Monday, 28 February 2011

EU Carbon Rises to Three-Month High, Tracking German Power, Gas

European Union carbon permits advanced to a three-month high as rising German power and U.K. natural gas prices boosted demand for emission allowances.

EU permits for delivery in December closed at 15.40 euros ($21.24) on London’s European Climate Exchange after rising as much as 1.5 percent to 15.52 euros a metric ton, the highest intraday level since Nov. 25.

The contract extended this month’s gain to 2.8 percent as the European Commission. The EU regulator is considering withholding 500 million to 800 million allowances in the next round of the bloc’s cap-and-trade program from 2013. The amount would correspond to the surplus that can be carried over from the current five-year phase that ends in 2012, according to the commission estimates in a draft document circulated last week.

German baseload power for next month gained 0.6 percent to 51.50 euros a megawatt-hour, according to broker prices on Bloomberg. Higher power prices can strengthen the incentive to sell electricity forward, stimulating demand for CO2 permits.

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