EU investigating carbon trading thefts

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http://www.bbc.co.uk/news/business-12241846

20 January 2011 Last updated at 10:47 ET

EU investigating carbon trading thefts

All carbon trading in Europe has been halted as the European Commission looks

into thefts of emissions permits.

The Czech carbon registry said 7m euros (£5.9m, $9.4m) of permits had seemingly

been stolen by hackers on Wednesday.

It followed a similar security breach in Austria on Tuesday, and prompted five

countries to suspend their registries before the entire system was shut down.

A Commission spokesman did not rule out the possibility of deliberate sabotage.

'Speechless'

" For us at this stage, it is theft, not sabotage, " said EU spokesperson

Kokkonen. " It could be possible that it is concerted action, because the recent

incidents, they happened within the last five days. "

The European Union (EU) has pioneered the market, which allows manufacturers,

power companies and other producers of carbon dioxide to buy and sell

Europe-wide emissions permits.

The permits allow the companies that own them to produce greenhouse gas, and by

issuing a fixed number of permits, the EU hopes to cap overall emissions.

Continue reading the main story

"

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It seems like they've been a bit slow to react "

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London carbon trader

The theft is thought to have involved a phishing scam, whereby fraudsters stole

password details by creating a bogus websites or messages that mimic legitimate

ones.

They then would have accessed the account of the victim company, and transferred

the permits into their own account, with the intention of selling them in the

open market for cash.

" I'm a bit speechless about the negligence some member states have been

showing, " said Jos Delbeke, a senior Commission official for the environment,

adding that it was too early to say what the scale of the thefts may be.

Originally the market closure was planned for a week, but Ms Kokkonen indicated

that individual EU member states will reopen their national registries once they

have demonstrated that they have improved their security measures.

The permits stolen from the Czech registry are thought to have been transferred

to an account in Estonia - one of the first countries to shut their own registry

on Wednesday.

The Commission also hopes that by shutting down the entire market, they may be

able to trace the stolen permits.

Bad publicity

" It seems like they've been a bit slow to react, " a trader in London told the

BBC.

He claimed his desk had already stopped trading permits for immediate delivery

on Monday because of market rumours that some certificates had been phished.

But the suspension of trading should have no practical impact on the market, he

said.

Trading in futures and other derivatives can continue, while the delivery of the

underlying carbon permits can be done once the market freeze has been lifted.

What is of more concern is the embarrassment factor of " another negative

headline for the market " , he said.

It follows a previous scandal in which carbon permits were used as a convenient

tool to facilitate a cross-border VAT fraud scheme.