EU Carbon Prices Post Biggest Weekly Gain

European Union

by | May 6, 2013

European UnionEuropean carbon prices surged to their biggest-ever weekly gain on Friday after German Chancellor Angela Merkel said the EU should take action on a plan to postpone the supply of permits.

The December futures contract advanced 22 percent since April 26, closing at €3.78 ($4.98) a metric ton on London’s ICE Futures Europe exchange, Bloomberg reports. The May 3 close represents a 23 percent jump from the day before. Trading volume doubled between May 2 and May 3 to 27 million tons, Bloomberg says.

It’s the highest close since April 16,  which saw carbon prices hit record lows after the European Parliament rejected an emergency plan to boost the ailing EU carbon market.

In a 334-315 vote, with more than 60 abstentions, lawmakers rejected a proposal to postpone — or backload — the auctioning of 900 million EU Emissions Trading Scheme allowances from the years 2013-2015 to 2019-2020. This measure was intended to reballance supply and demand, and reduce price volatility.

At a May 3 Protestant church event in Hamburg, Merkel said: “Something also has to be done on backloading, otherwise we have a development that goes in the wrong direction. All of the assumptions that are the basis of CO2 trading no longer apply,” according to Bloomberg.

The European Parliament’s environment committee meets today in an attempt to revive the backloading plan rejected by the full assembly last month.

Analysts have cautioned about carbon prices in Europe inching closer to zero unless policymakers take action, either through backloading or some form of long-term structural change.


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