Skip to content

Carbon markets have had a rocky ride since trading began five years ago in the European Union. The latest bump came last month, when swindlers used faked e-mail messages to obtain access codes for individual accounts on national registries that make up the bloc’s Emission Trading System.

Traders and companies who fell for the ploy on Jan. 28 were directed to a rogue Web site and invited to enter their security codes — a practice known as “phishing” in the jargon of the Internet.

The swindlers used the stolen codes to gain access to electronic certificates that represent quantities of greenhouse gases. They then sold the certificates through trading accounts registered in Denmark and Britain.

The attack on the German national registry, which appears to have been among the hardest hit, could have netted the swindlers as much as $4 million.

The European Commission, the E.U.’s executive branch that oversees the system, said last week that it had started an investigation into the fake Web site and was “working on closing it definitively.”

In Britain, the Serious Organized Crime Agency and the Financial Services Authority were investigating the case, according to the British authorities.

Carbon trading is a system that caps the amount of carbon dioxide, the main greenhouse gas, that companies may emit each year. Companies exceeding their quota can buy extra certificates from those companies that succeeded in shrinking their carbon footprint by adopting environmentally friendly technology or modifying production in other ways.

The system is the main tool used by the European Union to meet its ambitious pollution-reduction goals.

Many economists say trading provides the most economically efficient way to reduce pollution. They point out that environmental markets elsewhere in the world, including in the United States, have succeeded in bringing down levels of sulfur dioxide emissions, which cause acid rain.

But since the start of the system in Europe, coal-burning utilities have earned windfall profits, while the prices of credits have never been high enough for long enough to force utilities and businesses to replace conventional power with significant amounts of renewable energy or other clean sources.

Other forms of shady trades have beset the carbon markets in Europe.

Last summer, the police confirmed that swindlers had been adding value-added tax to the price of carbon permits sold to businesses — and then disappearing before turning the tax over to governments.

Frenetic trading linked to the popularity of the tax scam was responsible for huge spikes in volume on some European exchanges last year. In December, Europol estimated that E.U. governments had lost about $7.4 billion in tax revenues. Governments now say they have mostly plugged the loophole.

Full story