The EU carbon market is in trouble again. Shucks. Who would have guessed?
Hackers have created so much disarray the EU market has been shut down.
(Reuters) – The European Commission has frozen spot carbon trade in its 72 billion euro ($97.1 billion) emissions trading scheme after carbon permits were allegedly stolen. [Reuters]
A market based on an unmeasurable entity — an atmospheric nullity that-might-have-been-worse — was asking for trouble. It’s not that the market has loopholes, it is a loophole. Offering an infinite array of ways to cheat, guarantees the crooks will come. “Lead us Not into Temptation” ought to start with managing the temptations. Carbon is not a commodity, it’s not a free market, and so sooner or later it will come undone. (That said, dumb ideas have lasted for decades). We might get lucky this time.
As I’ve said before, if the bulk carrier turns up empty, the buyer notices the coal is missing. But if the scammers sell empty carbon credits, who can tell? The two top auditors were suspended, prices have been falling and people leaving for better opportunities, some shifty Hungarians sold credits twice (and were allegedly not the only ones to do so), some UK naughties used it to avoid paying the VAT tax, as well as a string of other offenses.
Europe’s €90bn carbon emissions trading scheme is in disarray, after a series of electronic thefts now thought to be worth €30bn.
Hackers targeted the national carbon credit registry in the Czech Republic last week, forcing the European Commission to order a continent-wide shutdown of the entire spot trading market.
The stolen permits were transferred from one country to another before vanishing completely. The Czech theft follows cyber-attacks on the Austrian and Greek registries in the last few weeks, and on Romania’s in November.
Futures and options markets in the permits have remained open, but prices have plunged as traders worry that the thefts endanger the credibility of the entire scheme. Read More at NewEnergyWorldNetwork…
Reader Stefan points out that the scheme has enemies within the EU:
The governments in Poland, Czech, Hungary, Spain and Slovakia would be happy to see the EU ETS collapse for good.
Reuters carries a list of scandals including:
DECEMBER 2010
One million EU carbon permits go missing from Holcim Romania’s emissions registry account due to a computer virus.
Italy‘s Gestore Mercati Energetici (GME) suspends spot trade after a record number of permits were traded at deep discounts.
Italian tax police investigate numerous small Italian firms for VAT fraud in carbon trading resulting in 500 million euros of unpaid tax. EU Commission says it will examine oversight of carbon market in 2011 and enhance it to prevent fraudulent activity.
There are plans to reopen the market:
BRUSSELS/LONDON, Jan 20 (Reuters) – The EU will reopen its 72 billion euros emissions trading scheme step by step, as each registry proves its security, a senior official said after the bloc froze spot trade due to possibly concerted permit thefts by hackers.
Is this the beginning of the end?
Reuters estimates the market to be $100b US (see the first quote above) – which, if true, tells us the market peaked in 2009 at $130 billion, and is slowing down. The exponential curve of growth ramped up until 2009 when it flattened. This would be the first sign that it’s seriously lost momentum. [Can anyone find a tally for the total of 2010 trading in carbon permits?]
Related Posts I’ve done on powerful force given to those who can create a currency:
Climate money: Bigger money moves in
Carbon credits: another corrupt currency?
Other posts I’ve done on carbon markets and corruption
The carbon casino caught with its pants down (again)
Corruption for dinner anyone: The Carbon Market Scandal (HFC -23)
Carbon market chaos strikes again
Posts on the banker enthusiasm for carbon trading
Deutsche Bank “really” want us to trade Carbon
Bankers, lawyers, investors disappointed: shucks