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Dec. 13 (Bloomberg) — European Union carbon permits erased early gains as natural-gas prices slumped, damping demand for emission allowances and undermining optimism that followed an agreement reached at the global climate summit in Mexico.
EU allowances for December 2011 dropped 0.3 percent to 14.85 euros ($19.88) a ton on Londons ICE Futures Europe exchange. They earlier rose as much as 1.8 percent, the biggest intraday increase since Nov. 17, after envoys at the United Nations meeting in Cancun reached agreements on reducing deforestation and a fund to manage aid for poorer nations.
U.K. natural gas for delivery next month lost as much as 3.7 percent to 57.2 pence a therm, the lowest intraday level since Dec. 2, according to broker prices compiled by Bloomberg. Lower gas prices may prompt some power generators to switch to the fuel, which requires half as many carbon permits as coal.
German baseload power for next month dropped 3.5 percent to 53.10 euros a megawatt-hour, the sharpest intraday decline since Nov. 1, according to broker prices compiled by Bloomberg. Lower prices can reduce the incentive to sell electricity forward, curbing demand for CO2 permits.
Negotiators at the United Nations meeting in Cancun, Mexico, agreed after two weeks of talks to a climate-protection package including a fund that would manage a
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