Fraud Besets E.U. Carbon Trade System

Carbon markets have had a rocky ride since trading began five years ago in the European Union. The latest bump came last month, when swindlers used faked e-mail messages to obtain access codes for individual accounts on national registries that make up the bloc’s Emission Trading System. Traders and companies who fell for the ploy on Jan. 28 were directed to a rogue Web site and invited to enter their security codes — a practice known as “phishing” in the jargon of the Internet. The swindlers used the stolen codes to gain access to electronic certificates that represent quantities of greenhouse gases. They then sold the certificates through trading accounts registered in Denmark and Britain. The attack on the German national registry, which appears to have been among the hardest hit, could have netted the swindlers as much as $4 million. But since the start of the system in Europe, coal-burning utilities have earned windfall profits, while the prices of credits have never been high enough for long enough to force utilities and businesses to replace conventional power with significant amounts of renewable energy or other clean sources. Other forms of shady trades have beset the carbon markets in Europe. Last summer, the police confirmed that swindlers had been adding value-added tax to the price of carbon permits sold to businesses — and then disappearing before turning the tax over to governments...read more