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Diamond dusts close to freezing point are not common. This display, photographed by Francesco Cadini on 3 February 2011 a few kilometers outside Milano, occurred when Francesco's car thermometer showed values between -1.5 and -2° C. Taking into account a possible inaccuracy, he says that it could not have been colder than -3° C.
The display formed from thick water fog. Cadini tells that in the area where the display was seen there is a phenomenon called the "chemical snow", which occurs in high pressure situation with fog and clear sky above the fog. The abundant pollutans in the air are supposed to initiate this chemical snowing and in one case 2 cm of snow accumulation has been recorded. There is an Italian language description of the phenomenon.
Most likely the pollutants were also responsible for the transformation of the water fog to observed diamond dust. A quick look at some papers reveals that if certain substance acts as an immersion freezing nuclei and contact freezing nuclei, the latter works at much higher temperatures. So probably the formation of this diamond dust was initiated by pollutant particles colliding with water droplets. Once the process starts, sudden freezing of droplets may produce splinters that further freeze other droplets and chain reaction is created. The water droplets also evaporate and the released water vapor deposits on ice particles, and through this growth we get the crystals with proper faces for halo making.
Supercooled water fog in general has a tendecy to turn into diamond dust locally. If you drive around the city when it is below freezing you are likely to encounter spots of diamond dusts. Usually only the lower layer of the fog turns into diamond dust and thus you can see halos only at night in the light of streelamps. Sometimes, though, as in Cadini's case, a whole fog column turns into ice crystals and sun or moon halos can be observed. The process punches a hole in the fog and in the photos above the edge of the foggy wall is seen clearly.
Cadini's display has also weak Moilanen arc, which shows best in heavily usmed image. He suspects that this might be the first Moilanen arc photographed in Italy.