Bishop Hill European carbon market suspended
The Telegraph (among others) is reporting that the European carbon market has been suspended for a week following the theft of emissions permits from the Czech registry.
More than €2bn (£1.7bn) of trade is likely to be disrupted after the European Commission said it would prevent transactions until January 26.
The suspension follows allegations that 475,000 carbon credits worth €7m were stolen in a hacking attack on the Czech carbon register. It appears that the intangible allowances were bounced between eastern European countries before disappearing without a trace.
I'm not sure I understand why they feel it necessary to suspend the market this time. According to the same article,
[The market] has been plagued by fraud, with Europol estimating that carbon trading criminals trying to play the system may have accounted for up to 90pc of all market activity in some European countries during 2009. Fraudulent traders mainly from Britain, France, Spain, Denmark and Holland pocketed an estimated €5bn.
Industrial-scale fraud - environmentalism's legacy to the world.
Reader Comments (41)
€5bn , for nothing , now is any one surprised that some very heavy criminals have got involved with is , worst case for them tiny jail time for fraud , which sure beats the hell of dealing drugs with its big jail time and high personal risk nature. Very good business indeed.
****ing unbelievable... and my income tax is going up this year too.
The opportunities that false markets present! Carbon trading has been a lulu!
The unscrupulous are just waiting for fuel rationing, mega, mega bucks!
When will they ever learn?
Can you imagine a world where they issue you with a CO2 quota and someone steals it?
"I'm sorry, you have exceeded you permitted CO2, breathing priviledges revoked."
All that free money is always irresistible to wrong 'uns.
See what happened when the Mafia discovered renewables subsidies in Italy.
One wonders what lies in store:
All that free money...
The lunatics are running the asylum - but then we all knew that long ago.
How can these "carbon credits" be stolen at all, let alone "disappearing without a trace"?
But how could it have been foreseen that criminals would exploit the gullible idiots and expect everyone else to pay for it?
Can't see it, can't smell it, can't feel it and you don't have to deliver it. What a gas!
Disgraceful. Almost a banker's whole yearly bonus.
This was even better a scam than the "emperor's new clothes". Absolutely brilliant. "Get your ethereal carbon credits here! Two for a euro!"
But where did the €5bn come from? If they want to scam the stupid, I don't really care. I do care of they are scamming our stoopid government (or the even stupider EU comission) because that means my tax is funding criminals (which would upset me).
It's not without possibility that those who are behind the AGW scam in the first place are closely related to those who are milking the system. Who would be better placed to game the carbon trading markets?
Delingpole will have a field day with this.
Dread0 at Jan 19, 2011 at 11:19 PM said - How can these "carbon credits" be stolen at all, let alone "disappearing without a trace"?
Perhaps they covered up their footprints.
Geoff, how could a thief prove they own the credits in question to the satisfaction of a potential buyer. What records are kept as to who is entitled to what credits. For this story, as nonsensical as it already is, to have any basis in reality, it is presumably that case that carbon credits are not the subject of unique serial numbers.
In all seriousness, how can carbon credits disappear without a trace, yet still exist to be sold on?
It seems that the gullibility of the 'climate change community' is gaining wider recognition among crims. They are now being targeted for fake climate change conferences:
http://www.bbc.co.uk/news/science-environment-12219472
I really shouldn't laugh, but....tee-hee...;-)
"were stolen in a hacking attack on the Czech carbon register. It appears that the intangible allowances were bounced between eastern European countries before disappearing without a trace."
That would be a bouncing cheque.
The original fraudsters are now being defrauded. That is the likely reason for only closing the market when this fraud was publicized.
KnR,
"€5bn , for nothing , now is any one surprised that some very heavy criminals have got involved...."
The criminals have been involved from the beginning. They're the ones that created the carbon market in the first place.
TinyCO2.
"Can you imagine a world where they issue you with a CO2 quota and someone steals it?"
I understand what you're saying, but I have a hard time just getting past "Can you imagine a world where they issue you with a CO2 quota...?"
CO2 Sequestration!
LOL
@ Gixxerboy,
Thank you for that. It is good to know that some climate scientists feel bitter about parting with money due to false climate related claims !-) Oh the irony,lol.
Expressing surprise that the "carbon" market has been plagued by fraud is a bit like being surprised at finding bear poo in the woods. (OK, in the UK, rabbit poo, perhaps.)
The watermelons will soon be claiming that 'carbon credits' cause global warming {;o)}, you just wait and see !
It's the new post modern ethos, manipulate the data, manipulate the law whats the difference as long as the long term political objectives are met. Carbon is the new drug of choice for organised crime and governments are dependent upon it. Those profiteering at present will be held to account by being told not to be so obvious as the game is being spoiled for the big boys to fleece the public.
@ Dread0 and others
Carbon credits are dematerialised certificates held in any of 27 national registries. Many of these registries are in fact one server, two men, and a dog in the local equivalent of a Regus office. Try finding the phone number of the Romanian registry anywhere on its website, for example.
Operationally it is the same as having a sum of money in an online bank account. No actual banknotes need exist. All you need to do is log in with the correct credentials and away you go.
They cannot be cancelled even if stolen because European law is inconsistent on ownership of stolen stuff across the 27 jurisdictions. In some European countries, if you buy a stolen article in good faith at fair market value, it becomes legally yours. In other countries it doesn't. If certificates are lifted in one country and pass through others it's different again.
In many European countries they haven't even decided what an emissions certificate is in law - a security, a derivative, a financial instrument, or what. They just enacted the emissions trading scheme laws witout aligning existing national laws much less pan-European ones.
So you can't simply cancel the stolen certificate numbers, because whoever's got them now probably legally owns them. You'd have to give those people replacements, as well as giving them back to the rightful ower, which means they proliferate. The whole point of them is they're supposed to be in limited supply.
So yes, they all have unique numbers, and at an Interpol level one could go back through the transactions and identify the initial theft. But the thief won't have left a forwarding address and they're still valid compliance instruments.
I pinged Dellers a note offering him the full inside scoop on this last time it happened but he didn't reply. I don't think he's that interested.
The wider point is that to resolve this what is needed is a pan-European decision on what these things legally are and what happens when they are stolen, i.e. do you get to keep them or do you unravel the transaction chain and void all the trades that occurred since they were stolen. Doing that would require a change in member country law and a further transfer of sovereignty.
This places Cameron in an exquisite dilemma. He wants emissions trading to continue because the indilgences are sold to emitters by governments. He needs the tax. But: this represents a transfer of soverignty to Brussels. They will be allowed to rewrite UK law on th defintion of various financial doodads and title to them if stolen. Per his manifesto pledge he has to put that to a referendum. So some sort of fudge has to be found and this market suspension is the start of what I reckon will be a long pause while our masters figure WTF to do next.
Josh, here's one for you.
Picture a power station in the background with a group of environmental protestors in front of the gates. Three are walking towards a burger van parked by the side of the road, one a red haired girl another an undercover policeman and the third Dr Hanson. Leant against the side of the van a couple of good fellows, hats, weasel eyes tooth picks pin stripped suits, spats. One looking around, the other with a clear plastic bag in hand stuffed full of paper. " Da ya need any carbon?"
Justice4Rinka,
"This places Cameron in an exquisite dilemma. He wants emissions trading to continue because the indilgences are sold to emitters by governments. He needs the tax. But: this represents a transfer of soverignty to Brussels. They will be allowed to rewrite UK law on th defintion of various financial doodads and title to them if stolen. Per his manifesto pledge he has to put that to a referendum. So some sort of fudge has to be found and this market suspension is the start of what I reckon will be a long pause while our masters figure WTF to do next."
It's not a dilemma Cameron will have much trouble dealing with. Transferring sovereignty to Brussels
hasn't caused him to pause so far and he has no intention that a referendum will be triggered. As for manifesto commitments, they're just verbiage offered for whoever is silly enough to swallow them.
Carbon trading could have been designed by the mafia. It was ctually designed by Enron.
Carbon credits bring Lakshmi Mittal £1bn bonanza
LAKSHMI MITTAL, Britain’s richest man, stands to benefit from a £1 billion windfall from a European scheme to curb global warming. His company ArcelorMittal, the steel business where he is chairman and chief executive, will make the gain on “carbon credits” given to it under the European emissions trading scheme (ETS).
The scheme grants companies permits to emit CO2 up to a specified “cap”. Beyond this they must buy extra permits. An investigation has revealed that ArcelorMittal has been given far more carbon permits than it needs. It has the largest allocation of any organisation in Europe
http://business.timesonline.co.uk/tol/business/industry_sectors/industrials/article6945991.ece
cosmic
There is no tax element AFAIK. The scam is that carbon credits are given away free to big business. That's why every corporation on earth loves global warming / carbon trading.
Read this and had a good laugh to myself.
"Climate scientists targeted for fraud"
http://www.bbc.co.uk/news/science-environment-12219472
It would seem that climate scientists only became aware global warming scams dating back to 2009.
Surely it dates back to James Hansens testimony to Congress in 1988.
@ Eric
They've been given away free up until now, but after 2012, they will be auctioned. The auction proceeds accrue to the government that issues them.
They're worth about £12 each at present but the idea is that the price of carbon will rise to prohibitive levels, with £50 a tonne being bandied about. Depending on what level of cut in emissions is agreed on, at what rate the economy grows (emissions are highly correlated to the economic cycle), and the price of a carbon indulgence, this means an annual Europe-wide compliance requirement of maybe two or three billion tonnes, and revenues of maybe a hundred and fifty billion, over the next 10 years or so.
This will be paid to EU governments by producers who will add it to the cost of their goods, or find ways to reduce their emissions, or buy if from companies who've set up expressly to farm and generate allowances they can sell on. An example of this is the Chinese factories set up to not produce HFC 22 and 23, claim allowances and then sell them on.
@ Eric Smith,
I said nothing about taxation.
I think this has far more to do with political control by the EU than pure taxation and it will e viewed as a beneficial crisis, i.e. one caused by the something brought about by the EU and the solution will be to extend the powers of the EU.
There was originally a tax element. That was one of the first things fraudsters targetted-
http://nds.coi.gov.uk/content/Detail.aspx?ReleaseID=413427&NewsAreaID=2
with total VAT carousel fraud across EU rumoured to have been in the billions. Because VAT was removed, the Treasury and taxpayer's lost their slice of the action from carbon trading. Most of it seems due to very lax exchange operation rules, ie friends and family getting the rights to create national trading exchanges with little scrutiny or accountability. The EU also lost it's fraud investigators because they were accused of participating in the frauds. The frauds were made easier because there were often few checks made to participating traders and no qualifications were required to play the market. Anyone could trade because there seems to have been a lot of pressure to stimulate the market to show it'd work. Plus the more trades, the more money the exchanges made. No real suprise losses have been enormous. Compare and contrast to other electronic trading, like SWIFT where people would love to hack it but can't because the participants are qualified and more incentivised to help keep it secure.
@ AH
VAT fraud is but one dimension. The creation of whole factories in China, ostensibly to produce widgets but in reality to produce then abate GHGs for which they then recieve credits, is another. Hacking registries to steal certificates and sell them is another, as is selling them yourself, stealing the proceeds, and claiming they were stolen by hackers. Reissuing cancelled certificates and selling them is yet another. Fake windfarms are still another. Soon it will be possible to sell domestically produced green power back to the grid for more than they sell it to you. Someone will certainly connect the mains supply in to the outward feed to the mains, and collect the difference.
It's a criminals' charter.
Your point about anybody being allowed to set up an exchange is not quite right. What happens is that anybody can set up an account at an emissions registry. They then transfer emissions certificates to themelves, move them around Europe and sell them on in small bundles looking apparently legitimate. Payment is instant because - until they suspended it - delivery and settlement of cetificates was also instant. You could steal the certificates, get paid, and disappear, weeks before anyone even knew they were gone. And the new owners of the certificates you stole now lawfully own them, so they can't be cancelled.
It's exactly what we should expect when governments and green activists get together to fix the world.
J4R
Argh. Please stop. I've hit my limit for one day:
The relentless recitation of the details of the stupidity just hurts. What an absolute bloody farce the ETS is.
Time to wheel out one of my favourite quotes:
Walter Russell Mead
This FT article on the stolen allowances is actually quite good:
http://ftalphaville.ft.com/blog/2011/01/20/464416/in-pursuit-of-475500-stolen-european-union-allowances/
J4R
Thanks for the link. I will have a look a little later, when I can face more ;-)
Actually, on a serious note, your comments on this are very informative. Even if I find myself reading them through the spaces between my fingers sometimes...
Many thanks, Justice4Rinka.
re J4R
Thanks for the FT link, it really does seem worse than we thought. The comment about anyone being able to set up an exchange was more a dig at the people who end up running the exchanges and taking a slice of the profits. They're typically well connected, as in CCX and Obama.
The system still doesn't seem fit for purpose. If the intent is to manage or monitor CO2 emissions, then surely there should be a better registry and audit function. Certs get issued to CO2 emitters who can then use them and cancel them, or sell them on. If they're exported or cancelled, presumably governments need to know this to track and manage quotas or reduction targets. If there's no registry keeping track of the certs, then governments can't know this. If there was, then thefts should be harder as the person who steals the certs would also need to amend the registry showing the trade and new owner.
That presumably doesn't happen or the thefts wouldn't have happened, nor would the re-importation and resale of supposedly cancelled certs that happened a while back. Properly designed, it would reduce thefts, frauds and money laundering but the scam seems to be run by a bunch of cowboys. Yet one of the reasons given for why EU CO2 was more valuable than US CO2 was the EU system was better designed. Which makes me wonder just how bad the US model is or was.
Also curious about the future, if or when certs get auctioned and linked to scams like the WWF's REDD deal. If that ends up making billions for the WWF, what would stop them buying certs at auction and simply restricting supply to businesses they object to, who then can't operate without the permits?