Carbon prices reached new highs trading at intra day highs for 2006 at over €30/tonne. The big change from last year, was that the power and gas markets reacted pretty quickly to carbon moves and prices rose to reflect these changes. This year gas and power if anything have trickled down, and if carbon is overbought as some analysts have suggested then we should the power and gas markets move further down.

There is major uncertaintity with regard to Phase II naps and this is not surprisingly having a dramatic affect on 08 onwards prices, but some of this volatility and fear is driving 07 and 06. Where clearly the break between the two products means that it is like saying there is a correlation between mackerel in the North Sea and Uk power prices. They are two very different products.

Finally, Carbon makes its name again as Npower look to test the possibility of carbon capature from coal plant in Tilbury the plan is to try and do a feasibility study on whether it would be economically viable. Problem is beyond 2012 there is so much uncertaintity, that the financing of such a scheme may be impossible even if it is feasible.