Issue CXXIX

The contents of the Newsletter is not a recommendation, either implicit or explicit, to buy or sell emission permits.
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Carbon Newsletter
DBLM Solutions
28 Aug 2014


The EUA Dec14 contract is currently at 6.40.
The carbon price seems to have reversed the
bearish momentum that we witnessed in the last
week. Prices are expected to work towards the 7
mark over the coming weeks. The main reason
given for recent losses is a return to normal auction
supplies after the month of August. Volume and
liquidity were low this week due to a bank holiday
in the UK. Volume across all platforms is set to
increase from 4 million to 5.2 millon units this
week. This week we have seen again major
European utilities urge the European Commission
to take early action on the proposed carbon reserve
with SSE throwing their concerns about carbon
reform into the mix. The UK should join with the
German Government and signal its support for the
early introduction of MSR, said Martin Pibworth,
SSE managing Director.
Weekly
Recap
ICE
EUA
Spot
ICE CER
Spot
ICE
EUA
Dec14
ICE CER
Dec14
21/08/2014 6.26 0.17 6.36 0.17
22/08/2014 6.35 0.17 6.38 0.17
25/08/2014 6.39 0.17 6.34 0.17
26/08/2014 6.30 0.17 6.33 0.17
27/08/2014 6.35 0.16 6.39 0.17
Volumes lots 434 0 32,006 652
Week %

1.43% -5.88% 0.47% -


The EUA/CER spread narrowed this week to
6.19, at close of business last night versus the
6.23 spread we witnessed last week and 6.03 the
week before. This weeks spread is on par with the
highest spread over the last two years.
Auctions
EEX held auctions last Thursday, Friday, Monday
& Tuesday Auction prices were 6.43, 6.34,
6.30, & 6.26 respectively. The cover ratios for
the above auctions were 6.70, 7.58, 5.18 & 4.74
respectively.
Aviation
Yesterday, the UK government announced that
they will distribute 26.4 million free EUAs to
airlines included in the EUETS. The assistance will
cover the period from 2014 2016. EasyJet is the
largest recipient of free credits, with an allocation
of 2.9 million allowances every year during the
four year period, according to the data issued by
Britain's Department for Energy and Climate
Change.
British Airways will receive 1.3 million a year and
Thomson Airways will receive 738,736 EU
aviation allowances (EUAAs), the data showed.
The annual allocation has been cut by around a
third after the EU agreed to restrict the ETS to
flights within the bloc, following pressure from
some of its major trading partners, which argued
that it infringed upon their sovereignty.