Issue LXXVII

Carbon Newsletter

DBLM Solutions
18 April 2013
This morning the bel wether DEC13 EUA contract is at 2.91. In the aftermath of the backloading failure European Governments pledged to keep working on a solution to the crippled ETS. The energy complex also plunged with cheaper prices across the spectrum. Major Utilities, such as EON and RWE saw a drop in share price. The general feeling is tht Europe is turning its back on the environment and focusing on the economy, but from this evidence it seems that thet are intricately linked. EON lost 5.5% off its share price and RWE 4.9% in one day. The view held, is without a healthy emission Trading Scheme, the need for feed in tarriffs and government subsidies will increase in order to meet 2020 renewable targets. These costs will ultimately be passed onto the consumer and thus energy bills will rise. However, market psychology can be attributed in some part to these agressive bearish moves.
Weekly Recap ICE EUA Spot 4.28 4.70 4.68 3.04 2.70 2,404 -36.91% ICE CER Spot 0.12 0.12 0.11 0.12 0.12 1,067 0 ICE EUA Dec13 4.35 4.77 4.76 3.09 2.75 182,411 -36.78% ICE CER Dec13 0.39 0.40 0.41 0.33 0.24 7,429 -38.46%

11/04/2013 12/04/2013 15/05/2013 16/05/2013 17/05/2013 Volumes lots Week %

we witnessed the week before and 4.78 the previous week. On Tuesday, the European Commission presented a package to advance action on adaption to strenghten Europes preparedness against Natural and man made disasters. The package seeks to bing adaption measures to a new level. The commission also adopted a green paper on Insurance in the context of Natural and man made disasters. The strategy focuses on 3 key objectives. Promoting action by member states this will involve encouraging all member states to adopt comprehensive adaption strategies (currently 15 are in place) Climate proofing action at EU level, this involves the promotion of insurance measures in key exposed sectors such as agriculture, fisheries and cohesion policy in order to make Europes infrastructure more resilient. Better informed decision making by addressing gaps in knowledge about adaptation and further developing the European climate adaptation platform (Climate-ADAPT) as the 'one-stop shop' for adaptation information in Europe. Estimates of future costs and benefits indicate that each euro spent on flood protection could save six euros in damage costs.The minimum cost of not adapting to climate change is estimated at 100 billion a year in 2020 and 250 billion in 2050.

Auctions
EEX held auctions last Thursday, Friday, Monday, Tuesday and this morning, auction prices were 4.30, 4.40, 4.68, 4.67 and 2.75 respectively. An additional 18,235,000 EUAs were brought to market via EEX. The cover ratios for the above auctions were 1.83,2.14,2.36,1.80 and 2.28 respectively. EEX also announced that 5 countries will sell 4.3 million Phase 2 EUAs during April.

The EUA/CER spread narrowed this week to 2.58 at close of business last night versus the 4.13 spread

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. DBLM Solutions is partly funded by the Wicklow Enterprise Board.