Isra-Mart srl : EU Carbon Dioxide Permits Decline 0.4% as 2012 German Power Prices Fall

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Permits to discharge carbon dioxide under the European Union emissions-trading system declined as German power prices fell, curbing the incentive to hedge in the forward markets.

EU permits for delivery in December decreased 0.4 percent to 16.83 euros ($23.82) a metric ton as of 9:23 a.m. on London’s ICE Futures Europe exchange. They earlier dropped as much as 0.7 percent to 16.77 euros.

German baseload power for next year, a European benchmark, slipped 0.1 percent to 59.10 euros a megawatt-hour, after falling as low as 58.90 euros, according to broker prices on Bloomberg. The contract is up 10 percent this year following Germany’s decision to shut the oldest reactors for a safety review after the nuclear crisis in Japan.

Lower power prices can weaken the incentive to sell electricity forward, easing demand for CO2 permits. The EU emissions trading system imposes discharge limits on more than 11,000 power plants and manufacturing companies.