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EU carbon rises after UK auction

European carbon emissions futures rose one percent on Thursday, moving above the 14-day moving average, after the UK government auctioned 4.5 million carbon permits.

EU Allowances for December delivery trading on the European Climate Exchange rose 13 cents or 1% to €13.17 ($17.99) a ton at 1042 GMT, after hitting an intra-day high of 13.23 euros soon after the auction.

EUAs moved above a 14-day moving average of 13.16 euros and volume rose sharply to 6,363 lots traded.

Spot EUAs on BlueNext rose 12 cents or 0.93% to €12.98 a ton.

The UK auctioned 4.5 million permits at €13 a ton 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 who are buying up EUAs to forward hedge power sales after 2012 when EUA prices are expected to rise.

“I am not surprised there is a rally. A lot of utilities are falling short,” another trader said.

Traders said news this week that CERs had been resold onto the market, resulting in the suspension of spot trade on BlueNext and Nordpool yesterday had undermined confidence in the market.

“Spot isn't the preferred method of trading now as it seems there is the desire to trade bilaterally, with some wanting to check the validity of permits to make sure they are not recycled ones,” an emissions trader said.

The market has been so concerned about CER recycling, that it offset bullish news on Tuesday that Poland will ask the European Commission for a new EUA quota of 208.5 million tons a year, traders said.

U.N.-backed certified emissions reductions (CERs) were up 10 cents or 0.88% at €11.47 a ton. (Reuters)