Carbon Trading Hits Record on ICE as Prices Reach Two-Month Low

Mar 28, 2014 6:41 am ET

March 28 (Bloomberg) -- Carbon trading soared to a record on London’s ICE Futures Europe exchange as European Union emission prices headed for their biggest weekly decline in almost a year.

Traders bought and sold 124 million metric tons of EU carbon futures on ICE yesterday, taking this year’s total to 2.2 billion tons, a quarterly record. The benchmark December futures contract fell 17 percent this week, dropping to the lowest since Jan. 24.

Factories and power stations in the 28-nation bloc are preparing to submit data showing their aggregate carbon-dioxide emissions for 2013 to the European Commission. U.K. discharges declined 2.1 percent in 2013, and those for power generators fell 7.5 percent, according to Department of Energy and Climate Change provisional data published yesterday.

“The main reasons behind the fall were lower U.K. emissions in 2013” as well as the handout of free allowances to Spanish installations and falling German power prices, Krzysztof Piatek, a trader at Vertis Environmental Finance in Budapest, said by e-mail.

The benchmark December futures contract fell 1.34 percent to 5.17 euros ($7) a ton as of 10:38 a.m. in London. The contract is headed for the biggest weekly drop since April.

More than 76 million tons of front-year permits changed hands on ICE Futures yesterday, the most since April 16.

The price of German 2015 power fell to a record for a fourth day, dropping 0.3 percent to 34.55 euros a megawatt-hour, broker data show.