January 20, 2011 / 4:15 PM / in 7 years

Timeline: Scandals in the EU carbon market

LONDON (Reuters) - The European Commission has frozen spot carbon trade in its 72 billion euro ($97.1 billion) emissions trading scheme after carbon permits were allegedly stolen.

The EU’s Emissions Trading Scheme caps half the bloc’s carbon emissions by allocating a fixed quota of carbon permits to factories and power plants.

In the past two years, the scheme has been blighted by upsets including the re-sale of used carbon offsets, a phishing scam, hacking and continuing VAT fraud. The carbon market has been impacted by scams almost every month of the year since mid-2009.

Below is a timeline of the main events and EU measures to counter them:

JULY 2009

An investigation is opened into suspected value-added tax (VAT) fraud in the French spot emissions market, which subsequently spreads across EU member states.

Europol estimates tax revenue losses at more than 5 billion euros.


Belgium charges four people for fraudulent carbon trading.


Online fraudsters target emissions registries through a “phishing” scam to steal emissions permits from companies and sell them illegally. Emails were sent to market participants requesting their login details.

EU member states approve proposals to revise the registry system to make it more secure, to be applied from January 1, 2012.

Three people charged and two companies under investigation in Norway for VAT fraud.

MARCH 2010

Hungary sold some carbon offsets to a Hungarian trading house, which had already been used by companies to comply with emissions targets. Spot trade suspended by exchanges BlueNext and Nordpool after some re-used offsets traded on BlueNext.

The offsets then had to be traced from a chain of the companies involved, and some are still unaccounted for.

Also Spain arrests nine people in a tax fraud probe. Norway investigates all companies’ EU carbon transactions.

APRIL 2010

Germany and UK arrest 25 people and investigate others in connection with suspected tax fraud.

MAY 2010

Norway arrests one more man in inquiry into carbon tax evasion and money laundering.


Czech CEZ stops trading with a number of smaller companies over fears of potential tax fraud.


One million EU carbon permits go missing from Holcim Romania’s emissions registry account due to a computer virus.

Italy’s Gestore Mercati Energetici (GME) suspends spot trade after a record number of permits were traded at deep discounts.

Italian tax police investigate numerous small Italian firms for VAT fraud in carbon trading resulting in 500 million euros of unpaid tax. EU Commission says it will examine oversight of carbon market in 2011 and enhance it to prevent fraudulent activity.


Austrian emissions registry closes until further notice due to a hacker attack on January 10

EU Commission suspends spot trading until the evening of January 26 after allegations permits worth millions of euros were stolen from a Czech registry account.

Commission says market will open step-by-step as each registry proves its security.

Reporting by Nina Chestney; Editing by Jane Baird

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