March 1, 2011 / 7:11 PM / 9 years ago

GreenX to resume CO2 trade when stolen permits known

AMSTERDAM (Reuters) - The New York-based GreenX exchange will resume spot carbon trading in the European Union when Austria identifies emissions permits stolen in January, its chief executive said on Tuesday.

Emissions exchanges closed to spot trade after hackers stole up to 50 million euros worth of permits also called EU allowances (EUAs) from electronic accounts in several European countries.

The much larger futures trade in EUAs remains unaffected by the scandal, which undermined confidence in carbon trading.

Exchanges want to make sure they filter out the stolen EUAs by matching their serial numbers against trades on their platforms.

Austria has so far refused to issue a list of such numbers, because it says it has identified the incriminating allowances and frozen their trade.

“We do not want to re-open until either we have a list from Austria or all those EUAs have been returned,” said Tom Lewis, chief executive of the GreenX exchange, which is a relative newcomer to the spot market and has about a 10 percent share of the carbon futures market.

“Until they have been returned the situation has not been resolved,” Lewis told Reuters in an interview.

Austria’s electronic warehouse of EUAs, or registry, has tracked the stolen permits to accounts in Liechtenstein and Sweden, where they have been frozen, it said last month.

Some exchanges have reopened with updated security measures but the biggest one, ICE Futures Europe still remains closed.

Dutch bourse Climex said on Tuesday it was permanently closing its spot CO2 trading business as a direct result of this year’s EUA thefts.

The European Commission has said that companies with stolen EUAs can still use these to match against their emissions, but companies remain nervous about holding them because there is no single European rule on liability for reimbursement of victims.

An official from the European Commission, which oversees the EU emissions trading scheme (ETS), said on Tuesday that it was preparing a plan to improve registry security.

The ETS is the EU’s main weapon to curb carbon emissions from power plants and factories.

DELAYED TRADING WELCOME

Lewis said he would welcome delayed trading, one mooted measure where sellers would have to wait several days before receiving their cash. The GreenX spot contract already involves a two-day delay before settlement.

GreenX launched on Monday a new exchange-traded contract for carbon offsets delivered in 2013, to account for a ban on certain types of offsets in the EU ETS after 2012.

The exchange is awaiting details of a California cap and trade scheme which launches next year, and expects to issue a relevant contract later in 2011.

The California market is a bright spot for emissions trading after hopes for a federal U.S. cap and trade scheme were dashed by a swing to the Republicans in mid-term elections last year.

“Our own estimates are that the market could in three years be 30-40 percent of the size of the European market now, if other U.S. states and Canadian provinces participated,” Lewis said. “We’re definitely bullish on the California market being established and liquid.”

Reporting by Gerard Wynn, additional reporting by Nina Chestney in London, editing by Anthony Barker

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