LONDON - The benchmark price for European Union carbon emissions futures rose almost 3 percent toward a three-week high on Thursday as banks increased buying ahead of a U.N. climate summit next week, traders said.
An EU Commission decision to appeal an EU court ruling over Poland and Estonia's carbon quotas was not the driving factor behind the rise in prices as it was widely expected, traders added.
EU Allowances for December 14 delivery rose 39 cents or 2.87 percent to 13.96 euros ($21.10) a tonne at 1200 GMT, with 2,951 lots traded. They were last at these levels on November 10.
Banks are buying ahead of Copenhagen, an emissions trader said.
A U.N. summit in Copenhagen starts on December 7 and financial institutions are building up positions, in case more stringent emissions reduction targets are announced there and prices rise.
The European Commission will appeal a successful court challenge by Poland and Estonia to their carbon quotas, a source in the European Union executive said.
The European Court of First Instance ruled in September that the Commission had exceeded its authority by rejecting carbon quotas suggested by Poland and Estonia for 2008-2012 and cutting them by 27 percent and 48 percent respectively.
U.S. crude was just over $77 a barrel on Thursday, as fund activity helped the market to recover from a sell-off the previous session, but huge amounts of oversupply curbed gains.
German Calendar 2010 baseload power was up 35 cents or 0.81 percent at 43.30 euros per megawatt hour.
Certified emissions reductions were up 35 cents or 2.77 percent at 12.97 euros a tonne.
(Reporting by Nina Chestney; editing by Anthony Barker)