EU Carbon Permits Drop as Natural Gas, Power Prices Decline

From Bloomberg

By Ewa Krukowska & Mathew Carr

European Union carbon allowances fell as German electricity and U.K. natural gas prices dropped, curbing demand for pollution rights in the world’s biggest cap-and-trade system.

EU permits for delivery in December declined as much as 4.2 percent to 6.38 euros ($8.34) a metric ton on London’s ICE Futures Europe exchange in London. The contract closed 2.9 percent down at 6.47 euros.

U.K. natural gas for next month dropped 1.2 percent to 67.7 pence a therm, according to broker data compiled by Bloomberg. Carbon permits sometimes track gas because power utilities burning the fuel need half the permits compared with when they use more-polluting coal.

German baseload power for next year lost 0.4 percent to 44.95 euros a megawatt-hour, broker data show. Lower prices can reduce the incentive to sell electricity forward, curbing demand for CO2 permits.

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