Issue LXVI

Carbon Newsletter

DBLM Solutions
24 Jan 2013 We had an interesting week in the carbon markets this week. All time lows were breached, yet again. A failed auction on EEX last Friday drove the bearish move, hitting €4.79 (EUA Dec’13) on Monday Morning last. This fed into that mornings auction where Phase 2 EUA’s were sold at their lowest to date - €4.70. Yesterday, carbon dropped throughout the day, to hit an all time low of €4.60 for Dec’13 EUA’s. This bearish move has been extended this morning to a new all time low of €4.54. Watch out for EEX auctions this morning as the likelihood of a new auction low is quite high. The carbon market is reaching a critical juncture as auction failure looms and reforms to assist the ailing market are stalled in political quagmire.
Weekly Recap ICE EUA Spot 5.43 4.96 4.80 5.29 4.51 78 -16.94% ICE CER Spot 0.15 0.12 0.15 0.18 0.15 71 0% ICE EUA Dec’13 5.61 5.11 4.95 5.45 4.65 120,586 -17.11% ICE CER Dec’13 0.36 0.32 0.34 0.37 0.34 12,719 -5.55%

The European commission are discussing the implementation of backloading procedures but the signs aren’t good after German elections in lower Saxony last Sunday. The victors do not favour interference and the Polish are vehemently opposed as ever.

The EEX announced that they will no longer extend the bidding window by 15 minutes if future auctions fail to reach the reserve price set on the day as happened last Friday. Traders outcry that this action effected market movements to the tune of -10% has been listened to. The supply into the market continues at a relentless rate and failed auctions in reality equates to backloading by degrees. EEX held auctions last Thursday, Friday, Monday and Tuesday. Friday failed, but €5.36, €4.70 & €4.88 were achieved on the other days respectively bringing an additional 10,633,000 to market.

17/01/2013 18/01/2013 21/01/2013 22/01/2013 23/01/2013 Volumes lots Week %

UN Offsets
Yesterday, the European Climate change commitee approved the commissions proposal to update the registry system to take into account the contentious issue of massive oversupply of ERU’s through the joint implementation mechanism. Now the commission must submit the proposal to the European Parliament and council for their approval. After which the 3 month objections window will be observed before the amendment will enter into force.

The EUA/CER spread narrowed this week to €4.51 at close of business last night versus the €5.31 spread we witnessed the week before and €5.78 the previous 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 - M: +353 86 160 2115 L: +3531 4433 584. DBLM Solutions is partly funded by the Wicklow Enterprise Board.

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