EU Carbon Market Suspended After ‘Theft’

The European Union suspended most of its 72 billion euro carbon market yesterday after the suspected theft of 7 million euros of emissions permits from the Czech Republic’s carbon registry.

The EU halted most carbon market operations at all 30 member countries following the attack. It did not give a date for trade to resume, but said it would open the emissions trading scheme as each member state proved the security of its system, Reuters reported.

“We don’t see a time when the registry will be open again because the attack was very serious and the situation is quite complex now,” the Czech market operator told Reuters.

It is just the latest incident to raise questions about the security of the EU’s carbon market. Security breaches have been reported in Romania and Italy, and last week the Austrian registry blocked access to accounts after a hacker attack, Bloomberg said.

The International Emissions Trading Association (IETA) said in a statement that it is “very concerned” about the disruption to business. “There are arguments, at least in the longer term, that centralized EU decisions need to be taken on the status of stolen certificates,” Bloomberg quoted the IETA as saying.

Oversight is currently administered by nations, Bloomberg said.

The scandal could discourage other countries, such as the U.S., Japan and Australia, from implementing their own cap-and-trade initiatives, Reuters said. “You don’t want to have a whole bunch of reputational problems, it discourages other countries taking the same policy route,” said Trevor Sikorski, carbon analyst at Barclays Capital, told the wire service.

In related news, the European Union’s plans to ban the most common carbon offsets from the emissions trading system could be delayed, Reuters said.

The ban would block factories and power plants in the EU from using emissions cuts at big Chinese and Indian industrial projects to meet their European carbon targets. The commission wants the measure in place from 2013.

But several member states want to push the start date back to May 2013 or later. The EU is due to vote on the measure’s timing tomorrow.

In other European news, the European Commission delayed action on revising the National Emissions Ceilings directive, which limits airborne pollutants in each country. Seven countries are now in danger of surpassing their limits.

A source at the EC told Reuters action on the issue would be unlikely before 2012 or 2013.

And European appetite for creating a super-grid linking a number of countries, and creating opportunities for more adoption of renewable energy, seems to have ebbed.

Energy Commissioner Guenther Oettinger had proposed the 1 trillion euro plan last November. But energy ministers from Germany, France and the Netherlands said the project did not warrant EU funding.