EU carbon drops to 3-week low

European Union permits to discharge carbon dioxide dropped to the lowest level in three weeks amid falling oil prices and concerns that the region\'s debt crisis will worsen. EU permits for December delivery fell as much as 3.3 per cent to €11.60 (Dh60.40) a metric tonne, the weakest intraday level since July 12. The contract was down 2.8 per cent at €11.67 on the ICE Futures Europe exchange in London, extending its loss to 18 per cent this year. \"The European, and global, economic situation is likely to remain the main driver this week,\" Matteo Mazzoni, an analyst at Nomisma Energia in Bologna, Italy, said in a research note. \"The hysteria which has wrapped financial markets lately, with weekly highs and lows not always easy to explain, is likely to further slow down an extremely weak market.\" Italian and Spanish ten-year bonds dropped yesterday on concern that the region\'s debt crisis will worsen amid slowing growth. Article continues below The EU emissions trading system is the cornerstone of Europe\'s strategy to cut greenhouse gases. It imposes pollution limits on more than 11,000 utilities and manufacturers in the region, including Royal Dutch Shell Plc, Europe\'s largest oil company, and Electricite de France SA, Europe\'s No 1 power generator. Emitters that produce less carbon than their quota can sell surplus permits, and those exceeding their limits must buy additional allowances or pay a fine. Open interest in EU carbon permits for December, a measure of trading positions that have not closed, rose to a record of 548.6 million tonnes on the ICE Futures Europe exchange on July 29 from 547.9 million on December 8, 2010. Economic output Crude oil for September delivery dropped as much as 1.1 per cent to $93.85 (Dh344) a barrel in electronic trading on the New York Mercantile Exchange. Oil can influence carbon prices because it\'s linked to economic output and to cleaner-burning natural gas in Europe. United Nations emission-reduction credits for December delivery fell as much as 4.3 per cent to €8.56 on the ICE Futures exchange, the lowest level since February 24, 2009.