From the UK Telegraph:
Seven arrests in suspected £38m carbon credit fraud
Seven people have been arrested and 27 residence and office locations were raided by police over a suspected £38 million pounds (62.8 million dollars) fraud involving the trade of carbon credits to avoid paying the value-added tax (VAT) which is required in the UK.
excerpt:
By Rowena Mason
Published: 7:36PM BST 19 Aug 2009
Officers from HM Revenue & Customs searched both residential properties and offices in both Gravesend and London targeting an alleged network of organised crime.
Members are believed to have been trading large volumes of high-value carbon credits from overseas sources free of VAT.
Tax investigators believe these may then have been sold on to businesses in the UK charging VAT that is never paid to the authorities.
Read the complete article here
======================
Is anyone really surprised? a Duke University masters candidate Alan Abramson clearly identified the risk this spring, as have many others:
The [carbon offset] market requires validators and verifiers all over the world. The system is already short personnel with these skills. Then there is the question of who pays these people? Regulators need to keep in mind the failure of the credit rating agencies (Moody’s, S&P, etc.) in the recent credit crisis. Markets require trust. Respondents said the only reason certain investors purchased some MBS assets was the Triple-A rating.42 These same respondents say that a significant flaw in the system exists because the credit rating agencies are paid by the bond issuers. A disincentive exists for doing a thorough job. Currently, validators and verifiers are paid by project developers. If we are to learn from the failings of the financial markets, this is an aspect of the carbon offset markets ripe for misconduct.
See the PDF of his masters thesis here
D. King (00:06:39) :
Ah! The Haggis! Did you know that the poor wee beasties have two short legs and two long legs? This evolutionary design helps them get around the highlands… Especially useful after a few wee drrrraaams!
Cricket – one of my other loves apart from beer and fine single malts. The late great Brian Johnston used to relate the story that once when he was commentating he mentioned that the bowler had set a field and that he had two short legs, one of which was square. A listener wrote in to him and told them that he should not be highlighting the poor bowler’s physical disabilities.
Meanwhile, back on the topic…. Personally I don’t have much sympathy for people who fall for these kind of scams. A mate of mine knows a bloke who he says is one of the smartest investors he knows and this particular bloke ost $750,000 on a NIgerian scam once. Not very smart if you ask me.
Caveat emptor….
Come now, you’re not Scottish! Fighting wasn’t listed as one of your top three loves!!
Jeff Alberts (23:25:40) :
Fighting is No. 4 on the list!. (I have a confession to make – my Dad was a Yorkshireman!)
jorgekafkazar (23:26:01) :
Kafkazar Investment Management today announced an initial offering of photon offset instruments.
Dear Mr. Kafkazar,
Following your enticing announcement of important new photon offsets, I have purchased from Blakholsun Trading Partners selected “put” options on your instruments. I am enthusiastically poised to make a great bit of money during the next coronal mass ejection event which I alone am aware of. How I have come by this information is a specialist trade secret. But be assured, I would not be buying a new house next to Al without your fabulous underlying paper. Thank you sir for your illuminating vision!
Indy “Puditoem” Bones
>>>Somehow, this is similar to creating money.
Of course it it, and that is the whole point. As has been pointed out before, AGW is all about the creation of a One World society, which must have world problems for a One World Government to solve.
A key issue in this goal is the creation of a One World Currency. Carbon Credits serve this role perfectly, as do the recently created IMF ‘Special Drawing Rights’. These IMF bonds are, in effect, a new One World Currency.
http://www.npr.org/templates/story/story.php?storyId=106221301
What is the betting that Carbon Credits will shortly be denominated in IMF SDRs, instead of Dollars or Pounds?
.
Jimmy Haigh:
” I have a confession to make – my dad was a Yorkshireman.”
Definition of a Yorkshireman: A Scotsman stripped of his generosity”
Oops – did I say that out loud?
Nogw (11:21:00) :
“Congratulations! You just made your own Hockey Stick!!!
Does this mean that temperatures folow geomagnetic data/ sea currents movement?”
Not exactly a Hockey Stick, more a Rocking Chair (as appropriate for an armchair climatologist).
http://www.vukcevic.talktalk.net/GeoMagField.gif
DaveF (03:36:26) :
Not bad Dave – I’ll be using that one!
Gene Nemetz. -Value added tax, VAT is levied by all European states and many other countries. While any tax is invidious,it is no more so than US sales tax which varies enormously from state to state. In the UK, at least, all prices have to be stated VAT included. Not so in the US where I never remember that it is an extra and have to dig out a few more dollars.
Smokey,
Your Broken Window Fallacy does not accurately describe what happens. The two scenarios are not mutually exclusive; they are concurrent. The tailor doesn’t get the baker’s money precisely because the glazier does.
Whether or not the town prospers as a result depends on the individuals involved and their efficiency. Maybe, the baker’s old suit is so threadbare that he’s too embarassed to go out for a drink. Maybe, the glazier cuts down the broken glass and sells it at discount.
Oliver Ramsay,
First, let me say I enjoyed your poetry last month.
Concerning the broken window fallacy, if I may make my point through a reductio ad absurdum argument, and take the analogy to its ultimate extreme:
Rather than a simple broken window, let’s assume that the entire town was destroyed by fire, and the inhabitants were left homeless, with all their worldly possessions destroyed.
Think of all the work suddenly available. Everyone would be rich! The town would be the wealthiest in the kingdom. Towns near and far would be burned to the ground by their inhabitants eager to become wealthy.
Bastiat’s point was that what we can see may not be as important as what we don’t see. Sort of like proving a negative.
Maybe this might make it clearer.
Look people, no need to get upset.
This carbon trading scheme and the skimming of by the governments IS the wave of the future.
After all, it was invented by Keneth Lay from Enron.
And, because it works so well in reducing emissions according to the various governemt agencies, I can could be applied to other problems as well. It should also work as good. For example:
A big problem in the USA is obesity. BUT, in many countries in Africa, people are actually undernourished.
Modeled after the carbon trading business, we can solve hunger in Africa AND obesity in the USA with “fat trading certificates”.
African governments will be issued free certificates depending on how many starving people they have.
Fat people in the US can make themselves immediately thin by aquiring these certificates. Just like Al Gore compensates his lifestyle CO2 footprint by buying carbon certificates.
Fast-food outlets like McDonalds would have to aqcuire certificates for every hamburger and fries they sell.
After all, just like the carbon trading is supposed to increase the cost of energy by taxing CO2 emissions and thus is theorized to lower those, so would theoretically increasing the cost of food reduce the food intake of fat people.
The African governments can thus get much needed revenues, and could even generate more by withholding food from their people, while the US aquires a certifiably thin and healthy population AND the US government gets money by skimming off some of the profits from the trade.
A win-win situation, just like the carbon cap-and-trade system.
When picking a company that sells carbon credits I recommend choosing a carbon offset company that works toward the Carbon offset standards required in Kyoto Protocol Flexible mechanisms like the CDM Gold Standard, Gold Standard VER, Voluntary Carbon Standard, and the The VER+ standard. An ethical company adhering to the required standards will likely not be a company involved in a scam operation.