LONDON/BRUSSELS, (Reuters) – The European Union froze spot trade in its carbon market for a week yesterday after a security breach, seeking to protect the battered reputation of the EU’s main weapon against climate change.
The United States, Japan and Australia have all delayed implementing similar cap and trade schemes, and the latest glitch to the EU system — by far the largest and most successful such scheme in the world — could detract further from adopting carbon trade as a global policy.
The trading scheme limits the carbon emissions of all big EU factories and power plants by issuing permits for each tonne of carbon emitted, which companies can then trade among themselves.
The European Commission suspended much of its Emissions Trading Scheme, the hub of a 92 billion euros ($124 billion) global market, following the suspected theft of about 7 million euros of emissions permits from the Czech Republic’s carbon registry. It allowed trade in derivative markets to continue.
This theft and a hacking attack on the Austrian registry on Jan.10 follows a raft of scandals to hit the market in the past two years, including VAT fraud, a phishing scam and the re-sale of used carbon credits.
“All traders have left the market — this is serious,” said one emissions trader.
Europe’s top climate official, Jos Delbeke, told Reuters that the market’s integrity was not at risk, but European governments had failed in their duties.
“I am a bit speechless about the negligence some member states have been showing,” he said.
