SAN FRANCISCO, June 21 (Reuters Point Carbon) - California
carbon allowances (CCAs) for delivery in 2013 closed at $16.75
per tonne on Thursday, up $1.10 from one week ago on a growing
belief that the shutdown of a California nuclear power plant
will boost carbon emissions due to higher fossil fuel use.
The bustling carbon market saw 155,000 CCA forwards clear on
the IntercontinentalExchange (ICE) this week, with 85,000 of the
permits trading on Thursday, the busiest single day for the
market since April 20.
A deal for 5,000 CCAs at $17.60 per tonne on Thursday marked
the highest price for the benchmark contract since November 14.
Profit-taking quickly brought the price back below
$17/tonne, market sources said.
A flurry of $20 call options that cleared on ICE Thursday
underlined the market's bullish sentiment, as participants paid
premiums of between $2 and $2.50 for the right to purchase a
total of 160,000 CCAs next year.
"People are protecting themselves against the price going
above $22, which is a very bullish play," one market source
Traders and brokers agreed that news that there was no
timeline for the restart of the San Onofre nuclear power plant
was the primary driver of prices this week.
The plant, which generates 8 percent of the electricity used
in the state, has been closed since January when a small
radiation leak was discovered.
At a meeting in Orange County in southern California this
week, federal regulators investigating the leak described the
problem with one of the unit's steam generators as "serious and
Southern California Edison, the plant's operator, could not
say when San Onofre would begin producing electricity again,
although it has said it will not be back online this summer.
The market is responding to the possibility that the plant
could be offline during 2013, the program's first
compliance year, sources said.
SCE, an investor-owned utility, has one of the largest
compliance obligations under California's future carbon trading
Initial reports from an ongoing investigation have pinned
the blame on the testing and assembly of the generator, which
was made by Mitsubishi Heavy Industries.
No trades were reported this week in the market for Regional
Greenhouse Gas Initiative (RGGI) allowances.
The benchmark 2012 contract was bid at $1.92 with an asking
price of $1.95 in the over-the-counter market, unchanged from
one week ago.