According to Bloomberg, Czech Republic requires 95 to 100m tons of CO2 allowances for the second allocation phase of 2008 – 2012. It is broadly the same as it received for 2005 – 2007 period, 97.6m tons a year. Allocation plan for granting individual allowances to companies must be submitted for the approval to the European Commission by the end of June. Given recent positive 2005 balance announcements of several European states and possible cuts in national allocations, this plan may be endangered. At the moment we see the news as slightly positive for CEZ as it may be a net buyer of CO2 credits and we reiterate our Buy recommendation.