UPDATE 2-EU stands by carbon trade in climate fight
* Access to CITL suspended for technical reasons
* Allowances have fallen around 27 percent in four weeks
(Updates lead, adds closing prices, CITL suspension)
LONDON, June 27 (Reuters) - The EU Commission stood by its carbon trading scheme on Monday although prices have fallen more than a quarter in four weeks and a fresh glitch, forcing a suspension of contract settlements, underlined technical problems.
"No single instrument will allow us to successfully address the climate challenge," Jos Delbeke, director general of the commission's climate action division, said in a statement.
"The Commission will therefore continue to work on a cost-effective mix of instruments that reinforce each other. The carbon market continues to take the central role in this."
The EU Emissions Trading Scheme (ETS) was launched in 2005 and caps the emissions of the bloc's heavy industry, forcing factories and utilities to buy carbon permits to cover their emission output.
In a new setback to the integrity of the scheme, access was suspended to the Community Independent Transaction Log (CITL) which authorises and enables carbon transactions in late afternoon Monday for technical reasons, the EU Commission said.
The CITL was shut down just after 1500 GMT. One trader said that trading data, including counterparty names, volumes and serial numbers, was revealed.
"This is one more nail in the coffin," another trader said.
The Commission said in a statement it would provide an update as soon as possible on when the CITL would be operational again.
PRICES REGAIN SOME GROUND
Prices for EU Allowances (EUAs) closed at 13.02 euros a tonne on Monday, having fallen around 27 percent in four weeks on concerns about the EU economy and about over-supply from the early auctioning of permits from the third phase of the scheme (2013-2020).
Deutsche Bank's Mark Lewis said last week the sharp fall was down to fear.
"Fear that the Eurozone and broader EU economy might now be on the verge of another severe slowdown, and fear that under such a scenario the Commission would not be able to take the necessary measures to re-establish price tension in the EU-ETS," he said in a note.
On Monday, however, the Commission stood by the scheme, saying other emissions-cutting instruments would take several years to have any effect.
"(The) EU ETS is legislation adopted and implemented; other instruments still need to go through the co-decision process and get implemented on the ground before they will start to have an effect on emissions, which takes easily several years," Delbecke said.
Market players have been arguing for the Commission to address the over-supply of EUAs, which will likely swell as a result of an EU plan to sell an extra 300 million tonnes during the next 18 months to raise funds for clean energy.
In addition, an EU energy efficiency directive agreed last week could spur lower carbon emissions, while sharpening opposition from international airlines to inclusion in the scheme from next year has hinted at exemptions, for example for some Chinese carriers, implying less demand.
But a Commission spokesman on Monday would not comment on whether the EU executive would delay the EUA sales to boost prices. (Editing by Anthony Barker) here