Issue CIV

Carbon Newsletter

DBLM Solutions
23 Jan 2013
The EUA Dec13 contract is currently at 5.34. Bullish movement in the carbon price is attributed to the pause in permit auctions. ICE auction UK permits on a fortnightly basis, causing a supply break every Wednesday fortnight.
Weekly Recap Nasdaq EUA Spot 5.05 5.04 4.91 5.02 5.10 0.99% Nasdaq CER Spot 0.40 0.40 0.40 0.36 0.37 -7.5% Nasdaq EUA Dec13 5.16 5.15 5.15 5.11 5.18 0.38% Nasdaq CER Dec13 0.39 0.38 0.37 0.37 0.38 -2.56%

on 1990 levels, a binding 27% increase in the proportion of energy generated by renewable sources, a non binding target of 25% increase in energy efficiency as well as a robust reform of the EUETS. The announcement is from the European Commission and still needs approval from the Council of Ministers. Reform to the EUETS has gathered pace as a document released yesterday shows that the much talked about carbon central bank option has garnered support in Europe. The document which represents a change in the EUETS directive, will allow an automatic market reserve facility, allowing at least 100 million allowances, or 12% of the market to be witheld or released to buoy prices. An auto release of carbon allowances would be triggered if the number of permits in circulation falls below 400 million. However, the mechanism will not start until 2021. The amendment also calls for an increase in the linear regression of freely allocated permits tro manufacturers from 1.74% to 2.2%. Many feel that this strategy is too little too late. The Carbon Market research group, Sandbag, stated that up to 3.8 billion allowances will be surplus to requirements in Phase 3. During Phase 2, roughly 680 million allowances are surplus to requirements. The above mechanism will not tackle the surplus.

16/01/2014 17/01/2014 20/01/2014 21/01/2014 22/01/2014 Volumes lots Week %

The EUA/CER spread widened this week to 4.73 , at close of business last night versus the 4.47 spread we witnessed last week and 4.22 the week before.

Auctions
EEX held auctions last Thursday, Friday, Monday &Tuesday, auction prices were 5.01, 5.04, 5.05, & 4.93 respectively. The cover ratios for the above auctions were 2.72, 3.19, 3.00 & 3.99 respectively. In total an additional 16,655,500 EUAs were brought to market by EEX in the last week.

2030 Targets
Yesterday, the European Union announced their latest set of targets for climate and energy. By 2030, a 40% reduction in greenhouse gases based

UN Offsets
From early March onwards, participants will be allowed to exchange eligible international offsets (CERs/ERUs) for EUAs.

The contents of the Newsletter is not a recommendation, either implicit or explicit, to buy or sell emission permits. Contact: David Boles, Compliance Markets -Direct: +3531 4433 584; Mob:00353 831744707 DBLM Solutions is partly funded by the Wicklow Enterprise Board.