Carbon-dioxide permits under the European Union cap-and-trade system fell to their lowest in more than a month as regulators prepared to sell phase-three allowances for the first time as early as this year.
The EU Climate Change Committee may vote in mid-June on a plan that could ready sales late this year for the phase starting in 2013 and running through 2020, the European Commission said. The regulator today postponed the vote, which previously was on the agenda of tomorrow's committee meeting.
EU permits for December dropped 5 cents to close at 16.59 euros ($23.68) a metric ton on London's ICE Futures Europe, the lowest since April 12. They ended yesterday's session at 16.64 euros a ton, below the 50 percent retracement of the three-day jump through March 16, a technical sell signal based on Fibonacci charts.
"It's a mix between the technicals and the EIB news," said Dennis Mignon, a trader with First Climate in Bad Vilbel, Germany. "I expect to hold here," he said today by phone. Fibonacci charts are based on the theory that prices rise or fall by certain percentages after reaching a high or low. Permits fell as low as 16.44 euros today in intraday trade, the least since March 25.
Carbon prices probably will rise over the next several weeks as utilities, which have shortages of allowances for 2013 and beyond, are forced to hedge forward-power sales, Mignon said. "In the end, they will start hedging," he said. "It may be a bit late this year."
Offset Discount Narrows
The discount of United Nations emission credits to EU allowances for December narrowed as much as 4 percent to its smallest since April 26 as the U.K. said it may buy credits to help meet greenhouse-gas targets through 2027.
The spread, traded as a separate contract, narrowed to 3.85 euros a metric ton on ICE and closed unchanged at 4.01 euros. Buyers may have purchased "in anticipation" of potential government purchasing, Mignon said.
British Energy Secretary Chris Huhne, acknowledging his goals to reduce carbon-dioxide emissions by 50 percent by 2027 from 1990 levels were "ambitious," said yesterday he'd detail by the end of this year proposals to soften the blow on energy- intensive industries. He said the intention is to make the cuts through domestic efforts while declining to rule out using greenhouse-gas-offset credits.
