January 23, 2012 / 3:15 PM / 8 years ago

UPDATE 1-RWE cancels membership with carbon bourse Bluenext

LONDON, Jan 23 (Reuters) - RWE, a leading European power generator, has cancelled its membership for carbon trading with Paris-based carbon bourse Bluenext, a sales director at the exchange said on Monday.

“They did pull out,” said Philippe Chavancy of Bluenext, which is owned by NYSE Euronext and Caisse des Depots .

He was unable to immediately say why RWE had cancelled its membership. RWE officials were not immediately available for comment.

According to Bluenext’s website, the exchange has over 100 members for spot carbon trading and 14 for futures trading.

This month, Air France started trading on Bluenext spot as it prepared to comply with the EU’s emissions trading scheme, which expanded to cover the aviation sector on January 1.

EU carbon prices lost over half their value last year as oversupply and concerns about the EU economy affected the market.

The carbon market has also suffered over the past couple of years carbon permit theft, Value-added tax (VAT) fraud, a phishing scam and the recycling of emissions permits.

Last year, the EU Commission suspended spot transactions in EU emissions permits after permits worth around 50 million euros were stolen from registry accounts in several EU countries.

Last year, BlueNext officials acknowledged that the exchange may have been used by companies to sell permits with VAT added, but maintained they have consistently acted to stop it.

BlueNext has agreed to pay 31.8 million euros ($41.08 million) to the French government to settle liabilities related to VAT fraud that occurred on the bourse between 2006 and 2009, according to regulatory filings.

In 2009, Interpol said CO2-related VAT fraud had cost EU treasuries over 5 billion euros in lost revenue.

Before the French government closed the tax loophole which led to the fraud, BlueNext was handling an average of more than 4 million spot permits daily on its exchange, but volumes later fell to 1.1 million after tax authorities took action.

In 2010, the Paris-based exchange lowered its spot trading fees by half to encourage more liquidity for its members.

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