EU carbon drops 6.9 percent on weaker energy, aviation fears

European carbon prices fell 6.9 percent Thursday on the back of losses in energy markets while traders were also spooked by fears of weakening demand for permits after India asked its airlines to boycott the EU Emission Trading Scheme. The ICE ECX December 2012 EUA contract traded at 6.92 euros at 1600 GMT Thursday, down 51 cents on Wednesday's settlement.
The bellwether contract opened at 7.35 euros before hitting a nine-week-low of 6.85 euros in afternoon trade as news that the Indian government instructed its airlines not to participate in the EU ETS and weaker energy markets led to a slump in carbon prices, traders said. "There are lots of reasons (for the fall), the India aviation story, lower power, gas and oil prices and extra supply. Any bearish news hits carbon hard," one trader said.