EU carbon up, EU to stop CER surrendering

LONDON (Reuters) - European carbon emissions futures were higher on Thursday as news broke that the EU Commission will change its carbon registry rules to prevent recycled Kyoto offsets entering the emissions trading scheme.

EU Allowances for December delivery trading on the European Climate Exchange were up 5 cents or 0.38 percent at 13.09 euros a tonne at 1639 GMT. Volume was heavy at 11.297 lots traded.

The European Commission said in a statement that it will suspend the process for surrendering certified emissions reductions and emissions reduction units from 0700 GMT on March 19 until the new rules are applied after August, except for the period April 19 to May 1.

The move follows concerns when reused CERs appeared on the French spot exchange BlueNext this week.

“This is a very good response. It cuts off the source of the surrendered CERs,” an emissions trader said.

U.N.-backed CERs were up 3 cents or 0.26 percent at 11.40 euros a tonne.


A UK auction on Thursday morning lifted prices above their 14-day moving average to an intra-day high of 13.25 euros.

The UK auctioned 4.5 million permits at 13 euros a tonne on Thursday. The auction was a record 12.79 times over-subscribed.

“It was very well subscribed. It could have been due to compliance demand,” said an emissions trader, referring to utilities which are buying up EUAs to forward hedge power sales after 2012 when EUA prices are expected to rise.

But other traders were more skeptical about the level of interest in the auction, suspecting that some market participants were deliberately trying to boost prices.

“It looks like someone put 750,000 euros on the table to be sure to buy 4 million EUAs. I am quite anxious someone paid that much money at the auction,” another trader said.

Another possible scenario is that some players are replacing CERs intended for 2009 compliance with EUAs given that spot CER trade is largely suspended.

Reporting by Nina Chestney; Editing by James Jukwey