Coal prices in the API 2 window had come under pressure, with the 2010 contract dropping USD 1.75 day on day to trade at USD 85.75/t, according to one broker.
The market had taken direction from oil prices, which came down from earlier highs, said one trader.
"Fundamentally coal is very weak," added the trader, pointing to low demand in Europe and increasing stock levels.

In the UK, within-day gas prices gained 1p day on day with a trade seen at 26p/th.

In the market for EUA allowances, the Dec 09 contract was last seen changing hands at EUR 13.33/t, virtually flat day on day.

With the House action, Obama will be able to tout significant progress toward tackling global warming after years of foreign countries criticizing Washington for not participating in international efforts.

The bill requires that large U.S. companies, including utilities, oil refiners, manufacturers and others, reduce emissions of carbon dioxide and other gases associated with global warming by 17 percent by 2020 and 83 percent by 2050, from 2005 levels.

They would do so by phasing in the use of cleaner alternative energy than high-polluting oil and coal.

At the core of the bill, which is around 1,500 pages long, is a "cap and trade" program designed to achieve the emissions reductions by industry.

Under the plan, the government would issue a declining number of pollution permits to companies, which could sell those permits to each other as needed.

'BIGGEST JOB-KILLING BILL'

Republicans said the bill was a behemoth that would neither effectively help the environment nor improve an economy reeling from a deep recession.

House Republican leader John Boehner called the measure "the biggest job-killing bill that has ever been on the floor of the House of Representatives."

Representative Joe Barton, the senior Republican on the Energy and Commerce Committee that played a key role in the bill, said it would set unrealistic targets for cutting carbon pollution. "You would have to reduce emissions in the United States to the level that we had in 1910," Barton said.

Both predicted higher prices for energy and other consumer goods and more U.S. jobs being shipped abroad as companies try to avoid the tough pollution-control requirements. Democrats said consumers mostly would be protected from price hikes.

During House debate, Energy and Commerce Committee Chairman Henry Waxman, the chief sponsor of the bill, said, "The scientists are telling us there's an overwhelming consensus ... global warming is real and it's moving very rapidly."

Massachusetts Representative Edward Markey, who wrote the bill with Waxman, added, "When it becomes law, and it will, for the first time in the history ... of our country we will put enforceable limits on global warming pollution."

Earlier in the day, Obama said the United States also had to work with developing countries to ensure their "obligations are clear" on fighting global warming.

China and the United States are leading carbon polluters.

California Governor Arnold Schwarzenegger, a Republican, said in a statement, "Although this bill is not perfect, it is a significant step in the national fight against climate change and it puts the United States in a position of leadership in international climate negotiations that must produce a global solution to this global problem."

California is recognized as having the most aggressive plan to fight global warming in the United States.

Some major environmental groups rallied around the bill, while others said it will need to be strengthened.

"This bill is the most important environmental and energy legislation in the history of our country," said Fred Krupp, president of the Environmental Defense Fund.

Even though climate change -- with its threat to polar ice caps and animal and plant species -- is a global problem, much of the debate in Congress broke along regional geography, pitting Midwestern and Southern states heavily reliant on dirty coal against coastal areas, where cleaner energies are more available.

Added Waxman: “I think we will hold the votes we had and add to them with support from those from agricultural areas,” said Waxman.

Responded Peterson: “I agree with that.”

Peterson said there are still some areas that need to be resolved, but he said that agriculture-state Democrats agreed to address those issues down the road.

Negotiators overcame their biggest hurdle on the bill tonight: whether the Department of Agriculture or the Environmental Protection Agency would oversee the carbon offset program.

According to the final agreement, the EPA will run the offset program and Congress will seek guidance from the Obama administration to shape the role of the EPA in determining how carbon offsets are used.

Peterson said staff will be working on final language tonight in order to have a draft available to Members by Wednesday.

Bourse competition
Paris-based Bluenext still remains the favoured exchange to conduct spot EUA trading, but the volume of spot EUAs trading directly on its screen has fallen to an average of 2.14 million a day since 9 June.
This compares to 8.84 million spot EUAs trading on average a day in May and the first few days of June before the tax change.
The European Climate Exchange (ECX) has seen a slight rise in the volume of “daily futures” trading on its platform, with total volume of around 850,000 allowances going through the bourse in the last two days.
This daily average of 426,500 EUA daily futures improves on the 279,000 a day average since ECX started the contract on 1 May, but the exchange still remains second place to Bluenext.
Unlike Bluenext, which concludes payment and delivery of spot EUAs within 15 minutes of transaction, ECX has a daily future spot contract which settles at the end of each day and clears a day later.

China and many developing nations want the rich to cut by at least 40 percent below 1990 levels by 2020 to avoid the worst effects of global warming such as droughts, floods and rising sea levels.

Offers made by developed countries so far work out at cuts of between 8 and 14 percent below 1990, according to the Potsdam Institute for Climate Impact Research.

FUNDS
The United States and Europe poured cold water on hopes for major public funds, such as the 1 percent or more of national wealth demanded by many poor nations to help them avoid a model of high-carbon growth dominant since the Industrial Revolution.
"The key issue is not the number," said Jonathan Pershing, head of the U.S. delegation, referring to "marginally" bigger investments to improve efficiency or to install low-carbon instead of polluting coal plants.
"We'd like to change that" view of developing countries that governments would bankroll the fight against climate change, he said, adding that carbon offset markets could play a big role.
The European Union also underscored that private finance would dominate in the climate change fight.
Pershing said progress in Bonn had been "slow," and the European Commission's Artur Runge-Metzger said "enormous effort" was required to get a deal in Copenhagen in December.

The United States expected China to undertake action, such as setting renewable energy targets, but not be legally bound to prove curbs. China and the United States are top emitters.

"We have advanced perhaps a couple of miles toward Copenhagen. We still have thousands to go," said Jennifer Morgan of the London-based E3G think-tank. The next meeting will be in Bonn in August.

Outside the talks in a Bonn hotel, protesters brought along two live camels and laid out some sand to illustrate fears of creeping desertification. "We spit on weak targets," one banner said, another said: "Shrinking targets, growing deserts."

The chair of a group looking at new actions to curb emissions by all countries said a draft text had swollen with new ideas from about 50 pages to 200. Big breakthroughs were likely to happen only in Copenhagen, he said.

"This is like the evolutionary process in reverse. The Big Bang comes at the end," said Michael Zammit Cutajar, of Malta.

Yet it is uncertain whether cutting agricultural emissions will be part of the agreement expected to emerge at the final meetings in Copenhagen, Denmark. The subject is complex, emissions are difficult to measure, and the whole question is politically sensitive, touching on the distrust between the world's rich and poor countries.

Scientists say it is too important to be left out.

"It would be absolutely nuts to ignore agriculture and forestry in any future climate deal," said Pete Smith, professor of soils and global change at the University of Aberdeen in Scotland.

U.N. studies say agriculture is the main source of income for one of every three working people. It also is a growing source of pollution, as the global population increases and living standards rise in developing countries where more people are eating meat.

The latest research by the U.N.'s Food and Agriculture Organization says animal husbandry accounts for 18 percent of all greenhouse gases, when taking into account the grassland and forests that are cleared for raising livestock.

When the FAO report came out in 2006, "people in the livestock sector were shocked because they thought they did a good job," says Akke van der Zijpp, a professor of animal husbandry at Wageningen University, a premier Dutch technical facility. Now they "are becoming slowly aware that this problem has to be solved."

One way to deal with it is to reduce the methane animals produce by changing their diet or through breeding.

Another is to make use of it and burn it.

Horrevorts says Wageningen University's Praktijkcentrum, or Sterksel Research Center, creates 5,000 megawatts a year, enough to power 1,500 homes. The farm uses the electricity it needs and feeds the rest into the national grid, for which the government pays up to euro177 ($238) per megawatt as a green energy subsidy.

Pigs can be remarkably house-broken animals. Here, they drop their waste through slats on the floor in the middle of the barn while spending most of their time in open stalls to the side. The slurry is channeled into three 4,000 cubic meter (141,250 cubic feet) tanks, then mixed into a thick goo with other organic waste like low-quality grain and carrot juice to increase the methane potential. Bacteria break down the material in a digester tank and the gas is siphoned off into a generator to produce electricity.

Horrevorts says a group including his operation and four other commercial farms avoids methane emissions equivalent to 40,000 tons of carbon a year. Dozens of private or nonprofit companies known as offset providers will "buy" those tons as a way of supporting renewable energy or other projects that reduce carbon emissions, then resell the credits to individuals or companies who want to shrink their carbon footprint.

Last year, Horrevorts said, a British offset provider paid euro5 ($6.70) per ton for people wanting to neutralize plane travel or rock concert tickets. This year, the farm was negotiating with a Dutch company seeking to become carbon neutral to promote a green image.

Though operating expenses for the biogas plant are considerable, the combination of electricity savings, power production and carbon credits makes it profitable, Horrevorts says.

Horrevorts, who is a biological researcher rather than a professional farmer, says that with financial incentives through electricity subsidies, it could become standard practice for ordinary farmers. About 50 commercial biogas plants operate on farms in the Netherlands, and the practice is spreading across industrial livestock farms around the world.

"I think in the future every pig farm will have a biogas plant," he says.

But at euro1 million ($1.3 million) for a big plant like Sterksel's, it's a rich man's answer to climate change.

About 70 percent of the world's agriculture is on small land holdings in the developing world, which complicates climate politics, says Antonio Hill of the nonprofit group Oxfam International.

"It sounds like a big pot," Hill said, but dealing with farming is tougher than with industries. "You're talking about tens of thousands of sources of industrial emissions in rich countries. That's a lot more manageable than hundreds of millions of agricultural operations."

Measuring and verifying carbon reductions from soil conservation, grassland management and livestock is complicated, and those reductions may not be permanent. Trees planted to soak up carbon from the air, for example, can always be cut down and burned.

In the past year, much effort has gone into quantifying emissions from deforestation in the tropics and ways to compensate countries like Brazil or Indonesia for protecting their rainforests. But no comparable effort has gone into accounting for the vast farming sector.

Another obstacle to an agreement in the U.N. talks is the suspicion that rich countries will meet a large part of their emissions reductions by buying credits on the international carbon market rather than constraining their own industries. In other words, they would buy credits from farmers to reduce their carbon footprint, in the same way the offset company bought credits from the Sterksel pig farm.

"If the idea is that rich countries will do most of their reductions through offsets, a lot of developing countries have a big problem with that," says Hill, speaking from his home base in Bolivia.

Hill says he expected nothing more in the Copenhagen agreement than "place holders," or general statements that can be filled in later with details. But Smith, the scientist from Aberdeen who co-wrote the agriculture section in the 2007 report by the U.N's Intergovernmental Panel on Climate Change, says including agriculture in the Copenhagen agreement would provide a source of capital from rich countries to poor ones.

"It would be a desperate shame if it were blocked for political reasons," he says.

At the long-term negotiations, the rich nations want a treaty -- that would force India and other major economies to accede to a deal with quantified targets for emission reductions. India and China would prefer an agreement that does not alter the existing UN convention -- which does not demand any emission reduction targets of them. They would want an `agreed outcome' -- an agreement that is endorsed by all countries and merely taken as that `enhancing' the existing convention's provisions.

The game reverses in the Kyoto discussions where India wants a treaty-like regime forcing rich nations to stiff targets in the short run. The rich countries are trying to find a way to make the protocol fizzle off with a softer agreement.

The developing and poor nations are keen that the targets in the Kyoto Protocol are tied up on the high side before they make any progress on the long-term agreement.

But the catch for both set of countries is that if the world has to see a treaty signed by Copenhagen in December this year, the treaty text should be put on table six months ahead of time. The time for that is running out. But then, there are some who believe India may actually gain more if there is no treaty at all for the moment.

A total 4.8 billion tonnes of carbon dioxide were traded last year, up 61 percent from the 3 billion traded in 2007. But most of these tonnes were traded over the secondary market, meaning they were traded between companies, often for profit, and did not represent actual reductions in the greenhouse gas emissions blamed for global warming.
Actual emissions cuts made and sold by United Nations-registered clean energy projects in developing countries fell by 30 percent to 389 million tonnes, worth $6.5 billion in 2008. This was down from $7.4 billion in 2007.

"The (market's) supply continued to be constrained by regulatory delays in registration and issuance and the financial crisis made project financing extremely difficult to obtain," the report said.

The lucrative secondary market for these reductions, populated by companies looking to either offset their own emissions or simply make a profit, rose by more than four fold to 1.07 billion.

The European Union's Emissions Trading Scheme, the 27-nation bloc's flagship weapon in its fight against climate change, rose by 87 percent to $92 billion last year, the World Bank said.

"While I still have significant concerns about this bill, particularly with regard to its cost and its failure to recognize innovative technologies like advanced nuclear energy, I believe this is the right
direction for our district, for our nation and for our future," Bono Mack said in a statement.

During the weeklong markup, Democrats defeated a suite of GOP amendments that would have scuttled the cap-and-trade program if it prompted job losses or energy price increases. But lawmakers made several other changes, adding amendments to create a federal "clean energy" bank and a "cash for clunkers" plan that gives consumers $3,500 to $4,500 vouchers toward replacing gas-guzzling cars with efficient models.

Democratic sponsors hailed the bill's historic passage through the
powerful panel, the first time a House committee has ever endorsed a
mandatory cap on the industrial pollutants that scientists have linked
to global warming.

But now comes the hard part. Several committees will have a chance to
assert their jurisdiction over the legislation, with the Democratic
leaders of the Agriculture and Ways and Means committees threatening to
hold up the bill for their own reasons.

House Speaker Nancy Pelosi (D-Calif.) is expected to play a key role in
shepherding the legislation onto the floor, perhaps before the August
recess. Senate action remains a work in progress, particularly on the
cap-and-trade provisions that remain well short of the 60 votes needed
to defeat a filibuster.

President Obama backs the climate and energy bill but has largely
stayed away from the details of the legislation.

All participants can look back upon at an informative and educational meeting. The second part of the workshop was spent with a trading simulation on the Climex Spot Platform to provide the participants with the opportunity to familiarise themselves with trading, trading strategies and Climex.

If you are interested to participate in a future workshop you can register at the Climex website: www.climex.com.

TNO applies scientific knowledge in order to strengthen the industry’s and government’s capacity to innovate both on a national and international level. In part, they this is achieved by linking knowledge from various disciplines. Innovation is often created at the interface of disciplines where worlds 'collide'. It is in these collisions TNO finds solutions to the problems that yesterday seemed insoluble.

Climex Energy Auction auctioned the contracts for a period of 3 years (2010-2012), with an option on electricity supplies for 2013-2014. During the two-hour auction, interested suppliers competed on price. After the auction, the contract was awarded to the supplier who offered the best price.

• Industries with one trader, trading on behalf of all their outlets and wishing to keep track of all the trades and account balances per outlet seperately;
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