2007 (Win) 2008 (Win)

EUA Prices      9.9            19.7

Spark Spread  8.6            10.6

Dark Spread   23.53         26.35

Clean Spark    5.9            5.12

Clean Dark     17.23         13.71

Cost of Carbon Spark   2.7    5.48

Cost of Carbon Dark   6.3      12.64

1.The EUA price for 2007 Win is made up of 19.7 for 2008 (Q1 08) and 0.14 of 2007 (Q4 07)

2. The EUA price for 2007 has collapsed dramatically from €30 to 0.10, this is because there was massive over allocation for the three years 2005-2007.

3. In 2008 there is a new Phase (aptly called Phase II) the theory is that the allocation of EUA’s is going to be much tighter than Phase I and will start to bite. Most of these allocations have been decided but there are still outstanding issues. Phase I was a pure European Scheme. Phase II is a Kyoto scheme and is open to outside influences.

4. Outside influence means that projects sponsored by EU countries in non eu countries will create carbon permits for trading. So the market whilst capped has the potential to increase the cap if you find the right project to sponsor.

5. The increase in the cost of carbon for the UK between 2007 and 2008. Obviously this number moves dramatically but is on average 4.5 for 2007 v 9.63 for 2008. A doubling of costs between the years in terms of carbon costs.

6. You will note that actual fuel spreads between 2007 and 2008 have fallen significantly for coal. This is because although coal costs have risen, due to the Large Plant Combustion Directive coal, will operate less and so demand will fall and so have prices.