Carbon prices have been forced to new highs, as scaremongering on Phase II naps in Germany and the UK has made the market more bullish. The biggest players the utilities are naturally short and so they are trying to cover some this short early. Perhaps a clear case of buy the rumour sell the fact. Coupled with this rise we have seen a fall in gas prices and a fall in oil prices, and perhaps this will start the expected swing of marginal plant away from coal to gas, which in turn should see a significant downturn in carbon prices. Coal generators are in a great position at the moment with power prices pegged (broadly) to emissions and coal prices continuing to be a record lows. The dark spread is at an all time high and these guys are making more money than your average gas generator.

There is no doubt that players feel that the power markets are high, and they are reluctant to push it dramatically higher as there are no real fundamentals this is a different market to 2005 with more control and understanding of volatility.