Feb. 21 (Bloomberg) -- European Union carbon permits advanced as lawmakers consider a plan to reduce an oversupply of the certificates and as power and natural gas contracts rose on cold weather.
EU carbon permits for December rose 6.4 percent to close at 5.30 euros ($7) a metric ton on London’s ICE Futures Europe exchange, the highest level since Jan. 22. They earlier dropped as much as 4 percent. United Nations Certified Emission Reduction credits for December climbed 1 cent to 34 cents a ton.
EU allowances have surged 89 percent from a record-low 2.81 euros last month as politicians debate a European Commission proposal to support prices by holding back new permits. A parliamentary panel backed a version of the proposed law change on Feb. 19, and may decide on Feb. 26 whether to pursue a fast- track approval process with member states.
Carbon rose as policy makers consider the price support plans and as “the energy complex rose, including natural gas and front-year German power.” Matthew Gray, an analyst for Jefferies Group Inc., said today by phone.
German power for 2014 rose 1.2 percent today, according to broker data. U.K. natural gas for the six months through September increased 0.2 percent on ICE.
The commission’s draft measure still requires backing from the whole parliament and national governments before becoming law.
Lawmakers may consider even more radical reforms because the current proposal to reduce supply temporarily by 900 million metric tons over the next three years will probably only boost prices to an average 13 euros a ton in the eight years through 2020, Gray said.
A tighter cap and price floors are among possible proposals, he said.
--Editors: Andrew Reierson, Rob Verdonck