In 2005 and half of 2006, the price of CO2 went from strength to strength as electricity producers - the big emitters - provided the demand while industrial firms sat on their hands, reluctant to sell.
Then, in mid-2006, came a big whammy. In monitoring this initial phase of the ETS, the EU's executive commission discovered that the quotas issued to the firms by national governments and based on preliminary estimates were generally far higher than the pollution actually emitted.
As a result, the market became flooded with CO2.
"The fall reflects the quota surplus in relation to the actual emissions," Conil-Lacoste said.