Thieves hack into carbon permits, Europe halts trading

Thieves hack into carbon permits, Europe halts trading

THE European Union suspended operations at all 30 of the region's greenhouse-gas emissions registries last week after a Czech firm reported that €6.8 million ($9.4 million) of carbon allowances had been stolen in a hacking attack.

The stoppage will last at least until tomorrow, the European Commission said on its website. Carbon prices in the world's largest emissions market dropped to their lowest in six days on the ICE Futures Europe exchange in London.

''This is certainly a good decision towards preventing the problem from spreading,'' Emmanuel Fages, the head of carbon research at Orbeo, the emissions trading venture of Societe Generale and Rhodia, said. ''This means that we will have no trading or delivery of spot permits. You can still trade forwards or futures.''

The reported theft follows two incidents in which allowances, used by more than 11,000 European factories and power stations to lawfully emit carbon dioxide, were stolen from accounts.

Blackstone Global Ventures, a trader based in the Czech Republic, lost 470,000 allowances according to Daniel Butler, the company's broker at Wallich & Matthes BV in Prague.


The EU market, intended to be a model for a future global carbon program, had a trading volume of €80 billion last year, according to Bloomberg New Energy Finance.

''If the EU emissions trading system wants some credibility, they need to beef up their infrastructure,'' Chris Allison, an operations manager at CF Partners, a London environmental adviser, said. ''There also needs to be more communication and openness from the registries as to when there are problems and what they are doing to solve the problems.''

Blackstone contacted the Czech registry after noticing an unauthorised trade on its account. The registry closed its operations and began an investigation. BlueNext, the Paris operator of the world's biggest spot exchange for permits, halted all trading. Registries, which track ownership of allowances, also closed in Poland and Estonia before the EU imposed a region-wide halt.

Last week's attack follows a theft last January in Germany and unauthorised access to Romania's registry in November.

The European trading system is the world's biggest carbon market. It was set up in 2005 and includes the EU's 27 member states and Norway, Iceland and Liechtenstein.