Issue XCVIV

The EUA Dec13 contract is currently at 5.24. Since last Friday, the carbon price dropped 0.55, bouncing off a low of 4.94 yesterday morning. Analysts cited the auction break today as a reason for the shift in price direction. Traded volume in the carbon market jumped 91%, month on month in September, the halving of auction volumes in August can account for much of this but traders have stated that an increased number of participants have transferred to the EEX and ICE bourse to fulfill their mandate requirements.
Weekly Recap 25/09/2013 26/09/2013 27/09/2013 30/09/2013 01/10/2013 Volumes lots Week % ICE EUA ICE CER ICE EUA Spot Spot Dec13 ICE CER Dec13

4.03 respectively (Cover ratio Amount of bids/ actual auction volume) In total an extra 18,065,500 EUAs were brought to the market place. In addition, ICE held their fortnightly auction last Wednesday, selling 4,134,000 EUAs at 5.30 each. Yesterday, the UK announced that they will distribute free allowances to EUETS participants sometime in November. Large emitters have waited since February for their 2013 allocation. The publication of this data is likely to cause volatility in the market with the possibility of the oversupply issue tackled to a certain extent through the correction factor which was adopted after the aggregate of NIMs (National Implementation measures) from all participating installations exceeded the legal cap agreed for Phase 3. The correction factor adopted for 2013 will be 5.73%. The top 10% most efficient installations will be rewarded with a greater share of free allowances with exceptions made for Industrials that are at risk of carbon leakage, i.e a risk of business transfer outside Europe due to costs incurred via the EUETS. The correction factor is set to increase to 17.56% by 2020. The UK are the first to announce the distribution of 2013 free allowances, expect volatility and much debate1s commercials get a clearer picture on their carbon status for Phase 3.

5.37 5.46 5.37 5.02 5.13 10,031 -4.46%

0.68 0.65 0.64 0.65 0.63 0 -7.35%

5.40 5.49 5.39 5.04 5.15 89,943 -4.63%

0.67 0.65 0.64 0.64 0.62 1,443 -7.46%

The EUA/CER spread narrowed this week to 4.50 at close of business last night versus the 4.68 spread we witnessed the week before and 4.95 the previous week.

IPCC Report
Last Friday, the intergovernmental panel on Climate Change published their 6 year cycle report. The report claims that climate change is occurring and there is a 95% certainty that human activity are the principle cause. The report can be found at http://www.ipcc.ch/index.htm#.Ukr6MWaoofE.

Auctions
EEX held auctions last Thursday, Friday, Monday x 2 and Tuesday,auction prices were 5.33, 5.38, 5.21,5.15 & 5.05 respectively. The cover ratios for the above auctions were 4.44, 4.28, 6.22, 3.70 &

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.