Issue LXXXIV

Carbon Newsletter

DBLM Solutions
13 June 2013
The EUA Dec13 contract is currently at 4.48. Carbon continues to rise. It is interesting to note that the cover ratio this week is roughly twice what we saw last week, demand is increasing. The power sector which accounts for approximately 40% of the EUETS must go to market to fulfil their mandate from now on. No more freebies. The vote on the second July (backloading), if successful may mean that these low prices will never be seen again, hence utilities arent prepared to take the risk. Another signal out there of a successful vote came in the form of Angela Merckels comments during the week, pre election. The jist was that she is preparing to cut back on renewable feed in tariffs, which has hit the end user hardest in the recent past. The cost of not decarbonising the economy is well documented, so if renewable subsidies are pulled back, the EUETS will be encouraged, leading me to believe that she may support the upcoming vote, dramatically increasing its chance to succeed.
Weekly Recap ICE EUA Spot 3.96 4.07 4.00 4.16 4.46 1,632 12.62% ICE CER Spot 0.37 0.39 0.39 0.41 0.44 108 18.91% ICE EUA Dec13 4.00 4.12 4.04 4.20 4.50 106,494 12.5% ICE CER Dec13 0.40 0.42 0.42 0.43 0.44 5,580 10%

Also keep an eye out for which side the Spanish will favour as they have said they will show their hand in the next week. The EUA/CER spread widened this week to 4.02 at close of business last night versus the 3.50 spread we witnessed the week before and 3.31 the previous week.

Auctions
EEX held auctions last Thursday, Friday, Monday and Tuesday,auction prices were 3.90, 4.12, 4.14 and 3.97 respectively. The cover ratios for the above auctions were 4.23,3.82,4.21 & 3.17 respectively.(Cover ratio Amount of bids/actual volume). In total an extra 14,404,500 EUAs were brought to the market place.

UN Offsets
The brakes are firmly applied to the Clean Devolpment Mechanism with only 6 new projects submitted in May. The CDM pipeline now consists of 8868 CDM projects. In May, 27.1 MCERs were issued with a total issuance to date of 1335MCERs. Two new program of Activities (PoAs) were submitted in May. These are a form of CDM project where they can be rolled out across a population or sector. Examples of PoAs would be cook stove programs or Organic waste treatment streams. Source: Unep Risoe I will take a brief look at supply and demand for UN offsets for Phase 3. Estimates for UN offsets during phase 3 are more than 1,900 MtCO2. The EU ETS and Effort Sharing Decision are the main sources of demand, with an estimated demand of less than 1,400 MtCO2e. The potential demand from other schemes is about 250 MtCO2e. Supply outweighs demand.

06/06/2013 07/06/2013 10/06/2013 11/06/2013 12/06/2013 Volumes lots Week %

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.