European Union faces legal action over fraudulent carbon emissions trading |
http://www.guardian.co.uk/business/2011/feb/20/carbon-emissions-trading-market-eu
The European Union faces legal and political challenges over its handling of the carbon markets which remain in chaos after a cyber attack forced partial closure of the Emissions Trading Scheme.
EU officials are due in a Belgian court on Monday to answer a request to name companies in possession of stolen allowances after a legal challenge by an Italian company affected by the fraud.
And on Wednesday the EU's climate change committee will try to reassure national governments and carbon exchanges that they have the right level of security in place to reassure nervous market users.
British energy minister Greg Barker has sent a letter to the EU demanding that standards need to be raised to UK levels to prevent further thefts.
Some national carbon registries and trading platforms have either refused to participate or been unable to convince EU officials that they have upgraded anti-corruption systems since a fraud – centred on Austria and involving 3.3m EU allowances – halted all "spot" trading from 19 January. Even in those markets where trading has restarted, volumes are very thin because traders remain wary, say industry sources.
"The short-term financial benefits of reopening are far outweighed by the long-term benefits of fully protecting our customers," said Henrik Hasselknippe, a managing director at the Green Exchange – which is backed by Goldman Sachs and other big investment banks and which has refused to restart trading in its "daily futures" contract.
"We still do not feel we have an overview of the situation. The Austrian government has so far refused to publish a list of missing allowances and we will continue to be worried until they do so," he added.
The ongoing scandal is an embarrassment for the EU, which regards the scheme as a key tool in the climate change strategy it is trying to encourage other countries to adopt. The "cap and trade" system, launched six years ago, aims to limit greenhouse gas output from 11,000 power and industrial plants.
The level of unease about varying standards across the EU was highlighted last week when Barker wrote to Connie Herdegaard, the EU climate commissioner, urging her to ensure "urgent and significant" action is taken.
The Belgian court case has been brought by TCEI of Italy, a holding company for trading house, The Cube Energy, which is hoping to recover 267,991 allowances that were stolen.
Laurent Arnauts of Arnauts Solicitors in Belgium which is acting for TCEI, told the pointcarbon.com website that it hoped the judge would freeze the stolen allowances. "We know the credits are stolen, but not where they are. Our main goal is to recover them." The EU is confident it will win the case.
Austria – one of a number of markets hit by the cyber attacks – says it has tracked down the stolen allowances but has so far declined to make public the serial numbers or confirm it has had them returned. It has cited national data protection laws, while governments across Europe are trying to work out whether companies found to hold stolen allowances – even unwittingly – could be subject to legal action.
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