EU Carbon Pares Gains as Analysts Revise 2013 Emissions Estimate

Apr 01, 2014 12:15 pm ET

April 1 (Bloomberg) -- Carbon permits pared gains as analysts said European Union data showed emissions from factories and power stations probably fell more than their predictions made earlier today.

The benchmark December carbon contract advanced 8.7 percent to 5.11 euros ($7.05) a metric ton on ICE Futures Europe in London. The futures had risen as much as 12 percent after the EU data was released.

Emissions in the EU’s carbon market fell 3 percent to 4.2 percent last year on a like-for-like basis from 2012, according to analysis by Bloomberg New Energy Finance, which earlier estimated a drop of 1.6 percent. Point Carbon, a unit of Thomson Reuters Corp., revised its estimate to a 3.1 percent drop from a fall of 1.6 percent earlier today.

Last year’s fall in emissions is close to the median forecast for a 3.8 percent decline by seven analysts surveyed by Bloomberg News.

The European Commission data show “several installations increased their covered emissions scope between 2012 and 2013,” New Energy said in an e-mailed statement. “This is likely due to the inclusion of new sectors and gases, or an aggregation of previously separate installations into single ones. This appears to particularly affect steel, refining and combustion installations.”

Under the EU’s 34 billion-euro cap-and-trade market, pollution rights are auctioned or handed free to factories and utilities that must have enough to cover their emissions or pay fines. Prices fell from almost 30 euros in 2008 as the financial crisis damped industrial demand, reducing the penalties for burning fossil fuels.

The bloc has started to temporarily withhold the sale of some permits to ease a surplus in the world’s biggest carbon market that pushed prices to a five-year low of 2.46 euros last year.