Having spent a happy morning analysing data from the EU commission report you evaluate how you could have predicted what had happened to the market before the data came out. All traders like to hindsight trade never in public but at the end of the day, they look and see what would have happened if they had sold another 20MW of Winter 06 on the Thursday when it was trading at £64.50, or when was the best time to buy Q3. Ineveitably, traders take views and they use what little information is around to make their decisions, some will of course, be experienced at reading signs that others will not have glanced at.

Powerisk notes that the commission is obviously trying to make sure that the first phase of the market is a success, (the definition of success varies, but for the market to remain liquid and for prices to stabilise is one definition). Therefore a total collapse on price is something to avoid, this is done, through the steady flow of information and that the number of allowances are not more than the EU ETS requires. In reality of course they can do nothing about this for Phase I and there are now suggestions that for PhaseII NAP's to be successful the cuts have to be greater than 6%. If Phase I allowances were trading at €30 and looking like rising this suggestion would not be being made, and the fact that it is being made by those who have seen the compliance data for 2005 makes Powerisk suggest that the emissions price has a distinct possibility of falling further.