Feb. 20 (Bloomberg) -- European emission permits declined as the cost of cleaner-burning natural gas dropped, potentially reducing the use of coal and demand for allowances.

EU carbon dioxide allowances for delivery in December fell 47 cents, or 4.4 percent, to 10.34 euros ($13.06) a metric ton on London’s European Climate Exchange at 11:41 a.m. The permits touched a record-low 8.05 euros on Feb. 12.

Emission allowances, which rose 25 percent in the past two days, are down 66 percent from a two-year high in July as the recession saps demand. Utilities need about double the permits when burning coal rather than gas. They can mostly switch fuels in summer, when demand is lower.

U.K. summer gas, for the six months through September, fell 1.9 percent on the ICE Futures exchange in London to 37 pence a therm. That’s the equivalent of $5.26 a million British thermal units. There’s 100,000 Btus in a therm. It dropped 3.3 percent yesterday.

Dennis Mignon, a trader with First Climate in Bad Vilbel, Germany, said he was not seeing a lot of selling by industrial companies in Germany after the issuance of 2009 permits this week boosted supply. Poland still hasn’t issued its 2008 permits, which must be handed to regulators by installations across the region on April 30.

The lack of selling in Germany “raises doubts that Polish factories and power stations will sell,” Mignon said yesterday by phone. The price near 8 euros last week attracted plenty of buying, especially from utilities, he said.

The total volume of EU and United Nations certified emission reduction credits traded yesterday by brokers and exchanges was 48 million tons, second only to the record 50.1 million tons traded the day before, according to figures from IDEAcarbon, the London-based company that rates emission-reduction projects.


Source: Bloomberg