The European Union's emissions trading scheme (EU ETS) surplus of close to 100 million allowances (representing 100 million tonnes of CO2) in 2005 was largely due to two factors: generous allocation and internal carbon abatement and efficiency improvements. The former was most significant. This is confirmed by the recently published 2006 numbers, showing that emissions were up about 1% from the previous year, resulting in a surplus of more than 60 million tonnes of CO2. These numbers are