EU carbon dips as EU ruling casts uncertainty

LONDON, Sept 24 (Reuters) - European carbon emissions futures were lower on Thursday, having fallen almost 5 percent in the previous session on an EU court ruling which cast uncertainty over the emissions trading scheme.

EU Allowances (EUAs) for December were down 19 cents or 1.42 percent at 13.15 euros ($19.37) a tonne at 0707 GMT, with volume at 1,051 lots.

EUAs opened at 13.05 euros, their lowest since July 8.

"Prices are testing the 13 euro level again after a bounce on profit-taking yesterday afternoon. They could potentially fall below 13," an emissions trader said.

The EU's second highest court ruled in favour of Poland and Estonia's plea for more generous caps on industrial carbon emissions on Wednesday. [ID:nLN487837] The ruling exposed cracks in commitment to the scheme between eastern and western Europe and undermined the powers of the EU executive Commission, experts said. Other east European countries may now join the appeal.

"This ruling creates significant uncertainty over Phase 2 (2008-12) EUA allocations (...) and on a worst-case reading would be very bearish for EUA prices," Deutsche Bank analyst Mark C. Lewis said in a research note.

If the ruling means the Commission exceeded its procedural limits and must now rule again on the national EUA quotas, the impact could be neutral.

But if the ruling means the member states can decide their own allocations, the impact would be very bearish for EUA prices and market confidence in general, the analyst said.

If Poland and Estonia are entitled to all the EUAs they originally asked to be allocated to their installations, the total cap for Phase 2 could increase by as much as 439 million tonnes, Lewis added.

U.S. oil CLc1 extended losses towards $68 a barrel on Thursday, while German Calendar 2010 baseload power BY1DE-1Y was up 20 cents or 0.43 percent at 46.95 euros per megawatt hour.

U.N.-backed certified emissions reductions (CERs) CEREZc1 were slow to trade.

For tables related to carbon emissions and price forecasts, see [CO2/POLL]

To see a factbox on trading schemes around the world, click here: [ID:nLC685579].

To see European industry emissions data, click on [ID:nLF156858].

(Reporting by Nina Chestney; Editing by Keiron Henderson)