EU Carbon Market Suspended Following Security Breaches at National Registries

The European Union Emissions Trading Scheme (EU ETS), EU's carbon emissions trading market, was suspended after several security incidents were reported by national registries lately.

EU ETS is one of the most important pillars in Europe's climate policy. It allows more than 10,000 installations to trade in carbon emissions permits that were allocated to them through national registries.

For the past two years, the emissions market has been plagued by problems like VAT fraud, phishing, the sale of used carbon credits, and most recently hacker attacks.

"Umweltbundesamt GmbH as registry and ECRA GmbH as registry service provider inform that for security reasons all access to the Austrian emissions trading registry has been locked because of a hacker attack on 10 January 2011. The Austrian registry can therefore not be reached until further notice," the company announced this week.

The national registries in the Czeck Republic, Greece, Estonia and Poland have also closed down in order to keep the stolen permits out of circulation.

Reuters reports that a market participant called Blackstone Global Ventures, announced that 475,000 permits disappeared from its account with the Czech Republic registry.

As much as 7-million-euro-worth of permits are now missing from the Czech registry after 1.6 million permits disappeared from the Romanian one last November.

EU climate officials are not happy with how member states have handled their roles in the scheme and have accused them of negligence.

Jos Delbeke, the Commission's director-general for Climate Action, told Reuters that members states were repeatedly warned about the security problems, but failed to take it seriously.

Fortunately, the market won't be very affected by the ETS suspension, which is estimated to last until January 26, because the trading in futures and derivatives has not stopped. This accounts for as much as 75 percent of the market.