Carbon prices reached record levels in recent weeks before plunging by more than a third as preliminary data revealed that France, the Netherlands, the Czech Republic and Estonia announced actual emissions in 2005 of less than the amount of allowances allocated to the market.

With carbon credits under the European Emissions Trading Scheme (EU ETS) trading at close to €30/MWh, their impact was lifting electirity generation prices across Europe. However, as initial data from phase 1 of the scheme has revealed a surfiet of allowances, the price of carbon credits plunged to around €11/MWh.

The data revealed that even Spain, which has been forced to burn more coal as an extended drought curtails hydro-electric generation, has used less of its carbon credits than expected.