Oct. 25 (Bloomberg) -- European Union carbon permits for December rose by the most in more than a month after Lithuania, holder of the bloc’s rotating presidency, said it would seek a mandate to start talks on a measure to temporarily cut supply.
The benchmark front-year contract advanced as much as 8.6 percent to 5.07 euros ($6.99) a metric ton, on London’s ICE Futures Europe exchange. That’s the biggest intraday gain since Sept. 5. The contract closed at 5.01 euros, up 7.3 percent.
Lithuania plans to ask the bloc’s governments on Nov. 8 for approval to conduct talks with the European Parliament about a carbon-market fix, according to a presidency official, who asked not to be identified citing policy. Prices have fallen 25 percent this year amid a surplus of allowances that has reached 1.8 billion tons, according to the European Commission, the market’s regulator.
“If successful, the move would imply that auction curbs could start as early as June 2014,” Itamar Orlandi, an analyst at Bloomberg New Energy Finance in London, said by e-mail. “The scheduling could imply that the Presidency has reason to believe the proposal will pass, although it is not clear whether this is based on an emerging consensus or simply a push for urgency.”
Countries have been discussing measures to trim the surplus and boost prices since 2012.
More than 104 million tons of the December carbon contract were traded this week, the most since the five days ending June 21, and over 30 million tons changed hands today, ICE data show. Almost 6 million tons were traded between 1 p.m. and 2 p.m. today, the most in any hour since July 3.
The premium of 2014 permits to contracts expiring in December widened as much as 21 percent to 17 euro cents a ton, the most since Sept. 12. The gap closed at 16 cents.
“It looks like utilities are rolling 2013 positions into 2014,” said Krzysztof Piatek, a trader at Vertis Environmental Finance in Budapest. “Selling December and buying the 2014 contract.”
United Nations Certified Emission Reductions for December rose for the first time in three days. The contract rose 3.9 percent to close at 53 euro cents a ton on ICE Futures, unchanged from a week earlier. The contract traded as low as 48 euro cents a ton, matching the lowest since June 20.
--Editors: Rob Verdonck, Andrew Reierson