* CERs fall to new record low of 2.67 euros a tonne
* Drop extends last week's falls on EU plan to limit supply
(Adds comment, background)
LONDON, July 30 Benchmark United Nations' carbon
permits fell 7 percent to a fresh record low on Monday, taking
their lead from lower prices for European Union emissions
allowances and extending losses made last week.
"This is a technical move as well as continued fall-out from
last week's EU announcement," a carbon trader said, referring to
a slide in carbon permit prices last week due to the lack of
detail in a long awaited European Commission plan to delay the
auction of new EU allowances (EUAs)
The Commission presented the proposal to bolster its
emissions trading scheme (ETS) by reducing a massive overhang of
surplus allowances and urged member states to hurry it through
by the end of the year.
There were no firm numbers in the Commission's draft
proposal, which disappointed traders, but a Commission analysis
has presented three options - withholding 400 million, 900
million or 1.2 billion allowances over the first three years of
the market's next phase.
On Monday, the benchmark contract for U.N.-backed permits,
called certified emissions reductions (CERs), fell
6.97 percent to 2.67 euros ($3.30) a tonne at 1043 GMT. Volume
was low at 575 lots traded.
EU allowances (EUAs) for delivery in December 2013
fell by 3.76 percent to 6.66 euros a tonne, narrowing the spread
between the two benchmark contracts to 3.99 euros.
The EUA contract dropped below a 6.85 euro support level
earlier on Monday which prompted selling, he added.
Last Friday, the contract's 15-day moving average went
beneath its 40-day moving average which was also a bearish
Both CER and EUA prices have scope to lose further ground,
traders said. EUAs could potentially drop to their record low of
5.99 euros, which they hit in April, they added.
Both EUA and CER prices have lost a lot of ground over the
past year and are well below levels needed to spur low-carbon
investment and discourage pollution.
CER prices have lost around 70 percent of their value over
the past year, beset mainly by a supply glut and flagging demand
for carbon permits due to a slowing European economy.
CERs are traded under the U.N.'s Clean Development
Mechanism, which was worth $22 billion last year. Under the
scheme, governments and companies in developed countries can
earn carbon credits by investing in low-carbon projects in
developing countries. They can use the credits to achieve their
Most of the demand for CERs comes from the EU ETS, the
world's biggest carbon market, which itself is oversupplied by
over 1 billion carbon permits. Many analysts expect the EU
scheme to be oversupplied at least through 2020.
($1 = 0.8084 euros)
(Reporting by Nina Chestney; Editing by Anthony Barker)