France seeks tighter regulation of CO2 market

PARIS (Reuters) - A French government report on Monday urged tighter regulation of the fast-growing carbon dioxide (CO2) emissions trading market, which has suffered from exploitation of legal loopholes and illegal sales practices.

France's finance ministry commissioned Michel Prada, former head of the country's AMF stock market watchdog, to publish a report on the CO2 emissions market.

Prada's report said there should be stricter fines against those who abuse the CO2 market or commit fraud in the sector. His report also advocated harmonizing laws across Europe for the carbon industry.

Last month, Hungary carried out the first sale of certified emissions reductions (CERs) which Hungarian companies had already used to offset against their emissions in the European Union's emissions trading scheme.

Such used CERs are invalid as carbon offsets in Europe and the EU executive Commission consequently amended its trading rules to stop them from re-entering the EU carbon market.

The European Commission said that from August onwards, it would prevent the re-entry into its emissions trading scheme of carbon permits which companies had already used for compliance with their emissions caps.

Last year, European police agency Europol said fraudulent trading in European Union carbon emissions credits over the past 18 months has caused more than 5 billion euros ($6.99 billion) in tax revenue losses for several EU nations.

($1=.7153 Euro)

(Reporting by Sudip Kar-Gupta; Editing by Marie Maitre and Amanda Cooper)