http://planetark.org/enviro-news/item/56959

AMSTERDAM - Companies with excess carbon permits are stock-piling them rather than selling them off in anticipation of tighter emissions caps and higher carbon prices from 2013, industrial firms and utilities said on Tuesday.

Many investors in the EU's Emissions Trading Scheme (EU ETS) have been concerned that industrial users such as steel and cement firms would dump the rest of their surplus permits for 2009 in the first half of this year, causing prices to crash.
Industrial firms sold carbon permits, called EU Allowances, (EUAs) last February to raise cash after the economic downturn reduced their output, causing prices to drop as low as 8.05 euros ($10.89) a tonne. Prices have since risen by about 66 percent.
Most of the 27-nation bloc has now issued 2010 permits, but traders said there has been little evidence of a major sell-off so far.
The threat of higher carbon prices and stricter rules on emissions limits after 2013 could be preventing selling.
"Industrial selling is not expected to a large extent," Ralf Wagner, manager of forward analysis at German utility E.ON AG, said at a carbon conference.
The economic position of many companies has improved this year, reducing their need to sell EUAs and buy back later to make profit, he added.
"You don't see a marked rise on spot volumes, suggesting industrials aren't selling as soon as they receive new allocations," Thomas Winklehner, head of emissions trading at Centrica told Reuters on the sidelines of the conference.
"Selling has been taking place but not in huge volumes and not with the urgency we saw last year," he said.
SELECTIVE SELLING
In a report last week, Deutsche Bank said it expected some selective selling of EUA surpluses at periodic intervals over the course of 2010, rather than large-scale liquidation.
Cement company Italcementi said it has resisted the temptation to sell its remaining surplus, preferring to build up its stocks for the EU ETS' third phase (2013-2020) when permits will be auctioned and prices are expected to rise.
"When we have banked our requirements for Phase 3, we will sell any residual suplus on the market," said Manuela Ojan, climate protection manager at Italcementi.
Some believe that if a sell-off did happen, its effects would be temporary and would not do any lasting harm to the market.
"I am not too afraid. A sell-off in the short term is not that bad," said at Statkraft, adding that longer-term supply and demand factors to 2020 are more important for the market.
But if really hard economic times return for industrial companies, they could be forced to sell again.
"If we see more of a downturn in terms of economic development we would expect another sell-off," said Markus Weber, emissions trading manager at steel company Thyssenkrupp.