Euro Carbon Market Fraud – trade suspended

From the Telegraph: European carbon market suspended over fraud fears

The European carbon market has been thrown into turmoil after the scandal-hit scheme was suspended for a week over suspicions of fraud.

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.

“Although such incidents are negligible in terms of actual market impact, they will over time undermine the credibility of carbon trading as a policy measure to reduce emissions in Europe. Immediate actions to improve the security of EU registries are thus needed.”


Full story at the Telegraph here

“It appears that the intangible allowances were bounced between eastern European countries before disappearing without a trace.”

How can something intangible disappear when it doesn’t exist in the first place?

I think they are worried about the wrong credibility issue.



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Les Francis
January 20, 2011 12:16 am

That’s always the problem when selling air – it’s hard to find when it disappears.
Who couldn’t see this happening?

January 20, 2011 12:22 am

On 28 December 2010 our government decided to suspend the plan to introduce domestic carbon trading. Everything is changing after Climategate. Good situation perhaps.

NZ Willy
January 20, 2011 12:23 am

Awesomely funny!

Rob R
January 20, 2011 12:32 am

What a surprise! Not.

UK Sceptic
January 20, 2011 12:34 am

That’s the EUSSR in a nutshell. Reality is far too hard for them to deal with so they bombard us with fantasy politics and funny money. To be honest I think the entire edifice needs suspending – preferably on the end of a rope.

January 20, 2011 12:41 am

Nobody in their right mind can say that they did not see this coming. IMO this market is all about making bankers rich and tax money for gov. and no way would it ever reduce CO2 as has been said by many here. Now somebody else figured out how to get in and get rich without spending a dime

January 20, 2011 12:42 am

Great cartoon panel by the way LMAO!

Brian H
January 20, 2011 12:48 am

I wonder — does ANYBODY actually believe that the physical reductions of CO2 production being traded ever really occur?

January 20, 2011 1:07 am

Your comic is perfect timing.
Canadians spend most of waking life sedentary: StatsCan

Nigel Brereton
January 20, 2011 1:09 am

It’s a good income source for organised crime since the need for registration details was relaxed.
Set up as a trader, no details required, buy carbon credits with funds obtained by illegal methods, sell them on to unsuspecting individuals and charge tham the Value Added Tax that is required but don’t pass it back into the revenue system.
Benefits are many fold, laundering of drugs money with an added bonus of the VAT payment. If they get traced and found they get fined. If they are caught with drugs they get jailed so the risk to ‘business’ lessens.
Reports by some news outlets suggest figures of 90% of trading in 2009 fell into this ‘business’ plan.

P.G. Sharrow
January 20, 2011 1:10 am

Odd, the con men were robbed by con men. Heavens where is honor between thieves?
At least for awhile honest people will be safe. Maybe we should give these guys a reward for keeping the credits market closed! pg

Doug Jones
January 20, 2011 1:12 am

As I was walking up the stair
I met a man who wasn’t there.
He wasn’t there again today.
I wish, I wish he’d stay away………

Phil from Queensland
January 20, 2011 1:22 am

So let me get this straight…..
Interpol are saying 90% of trades in 2009 were corrupt (I image the 2010 figures wont be much better.) thereby feeding billions of tax payers money into organized crime syndicates and they are still allowing the carbon exchange to trade…..
They used to say: “the end justifies the means” but these new age thinkers say : The attempt to acheive an end no matter how obscure or absurd is justifies any corrupt incompetent means”
Or am I just having a grumpy day?

John Marshall
January 20, 2011 1:28 am

‘Undermine the credibility of the carbon market’? It has already been undermined by being set up. There were warnings that this would happen in the first week! Carbon trading is a stupid controlling idea from a corrupt European government.

Richard Heg
January 20, 2011 1:28 am

On the subject of fraud, from the BBC today:
Fraudsters are targeting climate scientists with fake conferences in a bid to make cash and obtain details.

January 20, 2011 1:50 am

I suspect EVERYTHING European of fraud…

January 20, 2011 1:50 am

(For those who want the script of the above excellent cartoon)
WIFE: Are you still sleeping? It’s past noon!
HUSBAND: I’m not sleeping! I’m having an environmentally friendly day.
HUSBAND: If I stay in bed, I don’t use up earth’s precious resources! No driving around releasing greenhouse gases, no consumer consumption frenzy… I even use less oxygen!
WIFE: How do you plan to make a living?
HUSBAND:I’ve set up a website where people can buy my carbon credits! They can take airplanes and drive SUVs, then just pay me to stay in bed!
by Nitrozoc & Snoggy (Cartoon)
Who is that husband?

Grumpy Old Man
January 20, 2011 1:54 am

It’s long been obvious that the scheme would be a magnet for organised crime. I wonder if the EC will have the guts to do a full audit and find out just how much intangible carbon is missing? the standard anodyne statement , “All such incidents….” so there have been others “are negligible”, (we hope) yada-yada, presupposes that any inquiry will dissolve peacefully by the “lessons learned” route aand details will be hidden from the public using the “commercially sensitive” detour.
The building of the 21st Century’s South Sea Bubble will not be deflected by the reality of trading an mythical asset in a corrupted marketplace.

George Turner
January 20, 2011 1:58 am

If they catch the culprits, will the charges amount to anything more than hacking a Facebook account to steal someone’s Farmville coins?

Joe Lalonde
January 20, 2011 2:03 am

I have 1/2 billion cyber dollars on my computer from winning in slots.
I was just wondering if I could convert this to carbon credits?
No, mine holds bites of memory and not air… 🙂

January 20, 2011 2:16 am

Interesting that the swine only squeal about fraud when it concerns the trough they have their snouts in. They have no right to complain. They planned to defraud the world. Hopefully the market tanks like the CCX when the suspension is lifted.
Of course then the usual suspects will just start blathering about bio-crisis, bio-credits and redistributing bio-debt through UN global governance…

John R. Walker
January 20, 2011 2:49 am

This is on top of the VAT (Value Added Tax) frauds already encountered that forced some governments in the EU to abandon that cash generating con on top of the carbon crime already being perpetrated…

January 20, 2011 2:50 am

Since the whole ‘Carbon Credits’ trade is a swindle of megalithic proportions, perhaps a private prosecution against those who set it up is in order? Since the primary beneficiaries of the ‘profit’ from this trade are Greenpeace, Fiends of the Earth, Earth First and other “Green” lobby and eco-terror groups, perhaps it is time to set Interpol on them as well…

Cynthia Lauren Thorpe
January 20, 2011 2:51 am

So…it disappears into thin air…
Who would’ve thunk it.
It’s the perfect crime, Guys.
Made by ~ in my humble opinion ~ imperfect criminals.

Ken Hall
January 20, 2011 2:54 am

Joe, I could exchange your 1/2 billion cyber dollars for 2 trillion web-based-carbon-credits on a new website I could set up if you agree to the deal. I suspect that both would have exactly the same intrinsic value.
OH damn my morality. I could make a fortune if I didn’t have a conscience.

January 20, 2011 3:03 am

It`s called carousel trading, it started with mobile phones, The fraud involves a company importing a mobile phone from an EU company without paying VAT and then selling the phone on with VAT before disappearing and pocketing the tax.
Same with carbon trading but they made it easier.

Roger Longstaff
January 20, 2011 3:15 am

Good. After the credibility of academics, universities and institutions lie in ruins, the “fresh air trading bubble” has finally been exposed. Note that the EU was the last to catch on. The last man standing is the govenment, who rake in billions (in the UK) through taxing power, cars, planes, etc., etc.
Now that the CAGW scam has finally been exposed, when can I expect a reduction in my tax bill? Let me predict that this will never happen, and that this has always been the “end game”.

January 20, 2011 3:45 am

This latest incident appears to be rather small beer don’t forgot the multi-billion carbon trading frauds (recently estimated at $7B USD, or 2% of GDP) in Denmark which lead to this richly ironic Guardian headline …
“Copenhagen summit: Denmark rushes in laws to stop carbon trading scam”

Nigel Brereton
January 20, 2011 3:58 am

It’s only the small change that they are chasing.
This story from the Times in 2009 puts it into perspective:
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.
The investigation has also shown that ArcelorMittal and Eurofer, which represents European steel makers at European level, have lobbied intensively in Brussels. This has included threatening to move plants out of Europe at a cost of 90,000 jobs, and asking European commissioners to meet Mittal.
ArcelorMittal is now free to sell its surplus permits on the market or to hoard them for future use. The latter would allow it to avoid cutting greenhouse gas emissions for years, effectively undermining the point of the scheme.
Either way, the company will have gained assets worth around £1 billion by 2012. The eventual value could be much greater. Each carbon permit is currently worth about £12.70 but the European Union has said it wants to drive this price above £30.
The rest of the article at the link.
In order for the UK to have any future energy capacity the government is counting on carbon prices going up to £75 /t by 2050.
This one example of why it is so hard to get a counter argument publicised!

January 20, 2011 4:05 am

I guess than plan by pols and Goldman Sachs to monetize the air has not been working out too well.
Funny that the same plan which has been a magnet to politicians (Obama, McCain) and financial parasites (Goldman, Al Gore, et al) is also the favorite of criminals.

Neil Jones
January 20, 2011 4:07 am

They are worried about a Tax issue, they don’t care about anything else.

richard verney
January 20, 2011 4:14 am

Nigel Brereton says:
January 20, 2011 at 1:09 am
“,,,,Reports by some news outlets suggest figures of 90% of trading in 2009 fell into this ‘business’ plan.”
I too have read reports that in some of the markets fraudulent trading accounts for perhaps 90% of all trades. If that is so, one wonders how the commission can say with a straight face “Although such incidents are negligible in terms of actual market impact, they will over time undermine the credibility of carbon trading as a policy measure to reduce emissions in Europe. Immediate actions to improve the security of EU registries are thus needed.”
This market needs to be completely closed for good. Trading CO2 will not limit CO2 emissions and therefore if CO2 is truly a bad thing, it will do nothing to curb the dangers. This trade simply means that life becomes more expensive for the ordinary consumer (who eventually picks up the tab), and revenue streams simply line the pockets of criminals and bankers (I know that some would class the latter as a sub-set of the former).

January 20, 2011 4:27 am

It should not be hard to find these criminals. They have built absolutley massive storage tanks somewhere to store all the CO2 they have obtained through the credits. These tanks must be easy to spot from satellites, surely? Trace the criminals back through the contractors who built the tanks; Simples!

Mark Twang
January 20, 2011 4:38 am

In other news: Catholic indulgence market crashes over doubts that Purgatory is real.

Joe Lalonde
January 20, 2011 4:40 am

Well Ken,
I have a piece of property on the moon and we could set up a government with no conscience. The problem is no air to sell on the moon???

January 20, 2011 4:49 am

Fraud…breeds more fraud.
Norfolk, VA, USA

January 20, 2011 4:54 am

However they keep on going ahead (who cares being truthful!):

January 20, 2011 4:58 am

Carbon trading is the only market in which Fraud benefits all participants.
Fraudsters get to spin money out of nothing.
Fraudulent credits depress the market price of carbon. This benefits net buyers of carbon credits.
OK, Fraudulent credits harm net sellers of carbon credits, except it too easy for them to get into the game as well – for example, if a dishonest (god forbid) alternative energy scheme takes power from the national grid, and sells it back as renewable energy, various incentive schemes ensure a tidy profit – even though net power in = net power out. Though I’m sure they are all too honest to do anything like that.
Fraud would benefit dishonest market administrators, though I’m sure they are all too honest to accept enormous bribes on offer to allow dodgy carbon credits into their systems.
If everyone is on the take, noone suffers, and it is a net benefit to the economy.
Of course, I’m sure its nothing like this.

Pete H
January 20, 2011 5:13 am

“Although such incidents are negligible in terms of actual market impact”
LMAO! That should have been held back for the “Friday Funny”! When no one is buying why would anyone want to nick them? Oops! Of course! I forgot the BBC pension fund!
I can hear Delingpole’s fingers hitting the keyboard as I type!

Pete H
January 20, 2011 5:24 am

Richard Heg says:
January 20, 2011 at 1:28 am
“On the subject of fraud, from the BBC today:”
Please tell me I have missed a day and its Friday Richard!
As Richard Black send people to look at the report on BBC impartiality in his blog I am never sure how to take him but the picture in the article is a cracker when it comes down to AGW!
For those who want a look!

January 20, 2011 5:29 am

Surely if these carbon credits have disappeared into ‘thin air’, this must have increased the amount of CO2 in the atmosphere..?
This is disastrous..!
Vis-a-vis Richard Heg’s link to ‘fake’ climate conferences – surely there’s a golden opportunity for us all here to take money from the ‘warmists’..? For a start, I wouldn’t have used London as the venue – too cold this time of year – what about Acapulco..? The Seychelles..? A new ‘Earth Summit’ in Rio..?
Oh – the opportunities are endless…

January 20, 2011 5:33 am

So CO2 really is dangerous! All those unrestrained intangibles bouncing around Eastern Europe! Think of the children!!

Tom in Florida
January 20, 2011 6:21 am

Joe Lalonde says:
January 20, 2011 at 4:40 am
“Well Ken,
I have a piece of property on the moon and we could set up a government with no conscience. The problem is no air to sell on the moon???”
Joe, I have bottled some clean Florida air. It is obtained only along the southwest coast at sea level when the wind is out of the west to ensure the highest quality. It is only $3 plus $67 for shipping and handling per liter. How much do you need? Cash or money orders only, no personal checks. Please allow 4-6 weeks for delivery. (disclaimer: opening the container voids any guarantee of air quality)

John from CA
January 20, 2011 6:30 am

Fraudulent traders mainly from Britain, France, Spain, Denmark and Holland pocketed an estimated €5bn.
This is “negligible in terms of actual market impact” — Are they Nuts?

January 20, 2011 6:46 am

“It appears that the intangible allowances were bounced between eastern European countries before disappearing without a trace.”
Kafka is alive and, apparently, writing for the Telegraph.

January 20, 2011 6:54 am

There is humor in this. Something that did not exist has disappeared and they can’t find it. And immediate actions to improve the security of EU registries are thus needed. What else is in the EU registries that does not exist and the EU wants to secure, missing money perhaps or a money trail.

January 20, 2011 7:00 am

When the fraudsters are caught, they should be sentanced to jail until the average Global temperature rises by half a degree

Claude Harvey
January 20, 2011 7:02 am

Trading paper instruments rather than real goods is nothing new. It has gone one since the invention of cotton futures contracts. I’m sure the cotton traders were always vexed over the pesky problem that at the end of the trading chain, someone got stuck with a load of real cotton. The carbon exchange is a trader’s dream that overcomes that inconvenience. At the end of the carbon credit trading chain, no one is stuck with anything real (no embarrassing bales of cotton sitting on your front lawn).
Maybe we should set up a “feelgood” exchange. Those of us feeling really, really good could agree to tone it down a bit at some future date certain in exchange for filthy lucre. A certificate of that transaction could then be entered into a “feel good” market where a chain of futures contracts would bet the value of the certificate up or down. At the expiration date, the original seller would “tone it down” and the ultimate purchaser of the contract could gaze at the contract an feel better about himself.

richard verney
January 20, 2011 7:06 am

It is not just that some trades within the market are a fraud, the entire market is very probably a fraud since it is very probably based upon fraudulent concepts, namely that the global temperature records are accurate, that global temperatures are increasing at unprecedented rates, that CO2 emissions are responsible for this, that a reduction in European CO2 emissions will have some effect, that CO2 is harmful. When this underlying fraud unravels as it very probably will if global temperatures cool (or at any rate fail to rise) over the course of the next 10 years or so, the sh*t will hit the fan.
If and when this all unravels, some powerful people have lost substantial sums of monies those powerful people will claim that they were misled and will want their pound of flesh. Heads will roll.
If financial institutions have bet 100s of billions of dollars on carbon futures, there will almost certainly have to be another bail out of the financial institutions much like the bail out that we have just conducted.
We may be smirking at the present development. However, all of this is not a joke since it could have serious ramifications unless this madness is stopped quickly once and for all and before it takes hold.

January 20, 2011 7:22 am

Tom in Florida says:
January 20, 2011 at 6:21 am
“… clean Florida air…”
{snicker} Only on occasion. Generally we deal with the smoke from fires… controlled or otherwise. At least our fires… even the ones that get away from them, smell really nice. I would hazard to say that we have the best smelling forest fires in the country.
It’s the Cypress.

Mike McMillan
January 20, 2011 7:45 am

It appears that the intangible allowances were bounced between eastern European countries before disappearing without a trace.
The key word here is “intangible.” Think “imaginary.”
Governments invent an imaginary thing, dole imaginary amounts of it out to their friends, then require everyone to own some of it. Then they claim that your having to buy this imaginary thing from their friends is “a free market.”
Imagine my surprise to learn that something imaginary has disappeared without a trace.

John from CA
January 20, 2011 7:47 am

Typical, the trading floor rumor on Monday related to a phishing scheme — someone knew something was up days before they decided to close trading.

Roger Longstaff
January 20, 2011 8:01 am

Sorry – my previous comment (containing “the CAGW scam has finally been exposed”) was wrong. The World Meteorological Organisation has today declared that 2010 was the (joint) “hottest year ever”.
You couldn’t make it up……………. How many people acually believe this rubbish ??

Marlene Anderson
January 20, 2011 8:17 am

Any industry created and populated by zealots and fools is ripe for the taking.

January 20, 2011 8:21 am

What happened is that the computer age has caused a last gasp frantic burst of energy of fascist activism, of the urge to centrally plan resource allocation via philosopher king planning. Old school communism and fascism failed for lack of these marvelous electronic brains that could replace the invisible hand of capitalism. Oh, and we can now control and command the weather too, with century long grand plans that smart grids, smart thermostats, toilets and garbage cans will enforce the details of.
It’s like a creepy dude who comes out of his defeatist shell when he discovers online dating but then degenerates into a maniacal stalker as he keeps trying to tweak his strategy to arrive in romantic paradise.
At least with computers there is always new hope that another have at it effort will finally spit out a magical formula for happiness.
The analogy with obsessive gambling is too close to even be humorous, since that’s what carbon futures is already an exact example of.

Patrick Davis
January 20, 2011 8:24 am

“Roger Longstaff says:
January 20, 2011 at 8:01 am”
Well, since 1850…apparently, that’s NOT 18:50 BTW.

January 20, 2011 8:29 am

Carbon Credits = The Emperor’s New Clothes.

Joe Lalonde
January 20, 2011 8:44 am

Tom in Florida says:
January 20, 2011 at 6:21 am
Sorry Tom.
My money was tied up with the last failed Carbon Credit Market. Lost a fortune!
Thank God for my pixy dust company on the Moon!
Want to trade?
Freetrade…godda love it!

Mike Jowsey
January 20, 2011 8:48 am

The cartoon accurately depicts the carbon trading paradigm. The husband is ‘developing nations’. The idiots buying his carbon credits (for not building coal-fired power plants, for example) are the ‘developed nations’.

January 20, 2011 8:52 am

My late grand-grandma (1892 – 1988) used to say:

When a thief steals from another thief, then God is laughing.

P. Berkin
January 20, 2011 8:54 am

Ha Ha, it’s just like The Sting ‘cept they set up Carbon exchanges instead of a phoney bookie’s office.

January 20, 2011 10:25 am

US-based scientist Lee Schipper said “My fear is not just that people in my field get mud on their faces, but that the line between legitimate activity and crime on the internet is getting thinner and thinner,” he said.
“The only way to tackle it will be if all the ISPs come together.”
They just can’t help themselves, CONTROL CONTROL CONTROL

January 20, 2011 10:26 am

I believe I just heard a report on the radio of a Daily Telegraph story concerning the Australian flooding being exacerbated because Aussie politicians went all in on the notion that global warming would bring drought. It is alleged that these brilliant politicos cut flood prevention funding and channeled billions to desalinization plants on the assumption fresh water would be in short supply.
Perhaps this drought problem could be more efficiently addressed the way the Chinese are doing with the Three Gorges dam, where seasonal flooding on the lower Yangtze has been stopped and impounded rain waters in south China are being pumped many thousands of kms to dry northern China areas. Does Australia know how to build dams and reservoirs? Have they even studied their own history enough to know that the recent flooding was not actually unprecedented?
And finally, is Australia a player on the world carbon exchange? As a seller, I would assume?

January 20, 2011 11:39 am

Richard Heg says:
January 20, 2011 at 1:28 am
“On the subject of fraud, from the BBC today:
Fraudsters are targeting climate scientists with fake conferences in a bid to make cash and obtain details.

Beautiful, fake climate conferences. Remember that li’l Portuguese gathering of Mann a few months ago? Maybe it was just such a setup.
Maybe we already have entire fake institutes… applying for real grants, but delivering only fake results… oh, wait…

January 20, 2011 1:47 pm

I’m confused, how can you steal something that doesn’t exist? Surely this virtual property only exists because it can be uniquely identified (perhaps by some sort of code) and so those credits ought to be able to be invalidated simply by withdrawing the validity of those codes.
Yay to those who designed the system. They’re right on their game.

January 20, 2011 2:00 pm

Transparency International will be producing a report on corruption risks associated with tackling climate change.
Global Corruption Report 2010: Climate Change
“The forthcoming Global Corruption Report will be the first comprehensive publication of its kind to explore the corruption risks related to tackling climate change. From international policy-making to national level mitigation and adaptation strategies and with a special focus on the forestry sector, the GCR will draw on the expertise of more than 50 experts and practitioners from the anti-corruption movement and the climate change field.”
Transparency International are best known for their annual Corruption Perceptions Index, a ranking of the countries of the world from the least to the most corrupt.

Pamela Gray
January 20, 2011 9:19 pm

Regarding the price of carbon credit stock, I know a guy who can crunch those numbers again and make the stock rise in dramatic and unprecedented fashion.

Nigel Brereton
January 20, 2011 10:27 pm

The shut down of the markets came about through one incident acording to the MSM.
Further reporting is suggesting differently. Other markets are reporting discrepencies and the amounts involved are increasing rapidly.
Unfortunately for the European Union’s system, the cyberattacks did not affect only the Czech registry but altered at least also some other four national registries as the ones of Estonia, Austria, Poland and Greece – causing both their closure and a widespread panic on the real safety of European Union IT infrastructures.
Talking to the National Broadcasting, a special from the Estonian Ministry of Environment – Mr. Jürgen Talkop declared that “Estonia closed is register yesterday, after learning that allowances went missing from an account in the Czech register, in order to avoid future incidents” questioned about a breech that seems to have caused damages for almost 40 million Euros overall.

January 22, 2011 6:50 pm

Comparing carbon trading to commodity futures trading is not correct. Buyers of a commodity(long position) and sellers of a commodity(short position) enter a market to establish equilibrium(price) between supply and demand. The economic principles of futures trading have been with us since the 1730’s with the Dojima Rice Exchange in Japan and before that in less complicated forms. The only supply demand equilibrium established by carbon trades is by government fiat. It simply cannot work as intended.

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