Sept. 5 (Bloomberg) -- Carbon permits advanced to the highest in almost five months after the benchmark contract breached a technical resistance level, power prices climbed and the European Union announced its allocation of allowances to polluters.
December permits rose as much as 9.9 percent to 5.02 euros ($6.61) a metric ton on London’s ICE Futures Europe exchange, the highest since April 9. German baseload power for 2014 gained as much as 2 percent to 38.60 euros a megawatt-hour, after reaching a record low of 36.05 euros on Aug. 6.
The European Commission said after the close of trading it will give factories 5.7 percent fewer permits than they sought in member-state plans submitted to the commission earlier this year. The handout will end a seven-month delay that helped lift prices from an all-time low of 2.46 euros a ton on April 17.
“Traders betting on lower carbon prices seem to be buying back futures,” Mark Owen-Lloyd, a trader at Clean Energy Group Ltd. in London, said today by e-mail. German next-year power “broke its down trend” when prices exceeded 37.25 euros a megawatt-hour, he said.
Carbon closed at 4.98 euros a ton in London, breaching the 200-day moving average of 4.64 euros, which had been identified by Krzysztof Piatek, a trader at Vertis Kornyezetvedelmi Penzugyi zrt in Budapest, as a technical resistance when prices peaked at the moving average on Aug. 28.
The permit distribution delay comes as countries had to adjust to the start of the EU emission trading system’s third phase, which began in January and runs until 2020. As of this year, utilities in western Europe no longer get free permits, while east European generators will initially have to buy 30 percent of their allowances at auctions, rising to 100 percent by 2020.
Under EU rules, allocation to individual companies were cut across all sectors because countries applied for more permits than available.
--With assistance from Ewa Krukowska in Brussels. Editors: Andrew Reierson, Rob Verdonck