EU Carbon Rises to Highest Since 2012 as Bloc Tightens Market

(Bloomberg) — European Union carbon allowances rose to the
highest level since 2012 after the bloc proposed tightening the
market and Greece’s new bailout reassured investors.

An unprecedented recasting of the carbon market will
probably remove 85 percent of a glut of permits that eroded
incentives to reduce emissions, a Bloomberg survey showed July
14. Last week’s proposal by the EU Commission to tighten the
program will effectively cut the cap through 2020 by at least
1.4 billion metric tons, the equivalent of 88 percent of the
yearly cap, Bloomberg New Energy Finance estimated Monday.

Benchmark carbon allowances settled 3.1 percent higher on
ICE Futures Europe, the biggest gain since April 20, data
compiled by Bloomberg showed. Prices rose as the Stoxx Europe
600 Index of shares advanced for a ninth session, after climbing
the most since January last week as Greece and its creditors
reached an accord paving the way for a new bailout.

“Uncertainty over Greece had prevented the market from
factoring in much of the upside from the measures to reduce
supply starting last year and the reserve being set up to
restore scarcity more permanently,” said James Cooper, an
analyst with New Energy Finance in London. “The debt deal has
alleviated some of this concern, with some funds now likely more
comfortable taking positions to profit from future price
rises.”

EU carbon allowances for December settled at 7.99 euros
($8.67) a ton on ICE, the highest since Nov. 13, 2012, after
rising as high as 8.01 euros. Volume almost doubled from the
previous session to 19.7 million tons.

To contact the reporter on this story:
Mathew Carr in London at
m.carr@bloomberg.net

To contact the editors responsible for this story:
Lars Paulsson at
lpaulsson@bloomberg.net
Dan Weeks, John Deane

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