DBLM Solutions

David Boles 01 4433584 (Direct) dblmdavid (SKYPE) david@dblmsolutions.com

DBLM Solutions Carbon Update

Carbon Overview

David Boles 01 4433584 (Direct) dblmdavid (SKYPE) david@dblmsolutions.com

At time of writing the Dec '13 EUA Contract was at 4.21. Carbon prices sunk below 4.30 for the first time in 5 days as German power prices hit the lowest levels in the last eight years. Yesterday, the European Commission announced that they will decide on Phase 3 free allocations for installations in September. The European Commission are currently studying the submitted National Implementation measures (NIM's) . The free allocation will consider NIM input as well as any cross sectorial correction factor needed. EU ETS rules foresee that a crosssectorial correction factor should be applied if the preliminary allocation for industrial installations through NIMs exceeds the maximum amount of allowances available. In this case, free allocation to all industrial installations across the EU would be reduced by the same proportion. The final decision also has the knock on effect of fixing the final cap for phase 3. One might expect a downward correction factor as member states manoeuvre for competitive advantage. Analysts believe there may be a substantial jump in prices on publication of this data in September. One to watch. It is estimated that actual allocation of free allowances will take 1- 3 months after the decision depending on state and actual difference to National NIM's.
Dec 13 EUA

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