Tag Archives: Emissions trading

Most Polluting Companies Makes Billions On Carbon Trade

I guess this is the final evidence that E.U.’s emission trading system is complete fiasco.  According to editor of Euro-correspondent.com Stephen Gardner the most polluting companies in Europe stand to make a profit of more than 13 billion euro by selling emissions permissions – ETS – they have been given for free, but won’t need.

“The most polluting companies in Europe are lining up to receive a windfall that could be as much as €13.3 billion from the ill-conceived emissions trading system.”

Stephen Gardner


I’ve been skeptical towards this emission trading scheme all along, but after reading Mr. Gardner’s latest blog post at the EUobserver.com, I have no more doubt; the ETS market is a complete flop!

Here are a few examples:

In Belgium, in 2008, ArcelorMittal received for its various plants 11,183,005 allowances. But it only used up 7,109,899 of them — a surplus of more than 4 million.

Another metal-basher, Corus, received in 2008 across various plants 11,414,550 allowances, but only used 6,953,746 of them.

Massive German ironworks Hüttenwerke Krupp Mannesmann, meanwhile, got 8.6 million allowances but only used half of them.

Editor of Euro-correspondent.com, Stephen Gardner calls it a “scandal.”

I have no problem agreeing with him.

Here’s what he writes:

Look closely enough at yesterday’s European Commission communication on ‘moving beyond a 20 percent greenhouse gas reduction’ and you will spot a scandal. It’s on page 3 and it reads like this: ‘With many allowances unused during the crisis, companies will be able to carry over some 5-8% of their allowances from the 2008-2012 period into the third phase of the ETS.’

What this means is that during the 2008-2012 period of the EU emissions trading system, companies were given more carbon allowances — pollution permits — than they needed. Partly this is a consequence of unforeseen events. Because of the deep recession, big steel firms and the like drastically cut their production between 2008 and 2009, emitting much less CO2 than expected, and so ending up with piles of unused emission allowances.

Stephen Gardner is editor of Euro-correspondent.com, and Brussels freelance environment correspondent for the Bureau of National Affairs (US). He is also a contributor to other media such as the BBC and the UK magazines Ethical Corporation and Private Eye.

But partly, the allowance surpluses are down to bad planning, lobbying and the rewarding by governments of their favourite industries (ie those that threatened to relocate elsewhere if they did not get bumper carbon allowance handouts).

Because of the way the ETS was set up, the surpluses are held primarily by heavy industry, rather than by power plants. Here are a few examples. In Belgium, in 2008, ArcelorMittal received for its various plants 11,183,005 allowances. But it only used up 7,109,899 of them — a surplus of more than 4 million.

Another metal-basher, Corus, received in 2008 across various plants 11,414,550 allowances, but only used 6,953,746 of them. Massive German ironworks Hüttenwerke Krupp Mannesmann, meanwhile, got 8.6 million allowances but only used half of them.

These massive surpluses were: 1). given to these companies for free, and 2). can be carried over to the next phase of the ETS (2013-2020) and sold then. By my admittedly back-of-the-envelope calculations, the 5-8% cited in the Commission’s paper means between 520 million and 833 million surplus allowances EU-wide.

Here is the absolutely scandalous part: the companies holding these allowances can sell them for at least an estimated €16 each in the next phase. That means the most polluting companies in Europe are lining up to receive a windfall that could be as much as €13.3 billion from the ill-conceived emissions trading system.

And who precisely will deliver this windfall to billionaires like Lakshmi Mittal? Well, while EU governments were dishing out massive surpluses to their favourite manufacturers, they gave far smaller allocations to power plants. This was because power plants can’t flounce off to another country if they don’t get what they want. So the massive Drax power plant in northern England, for example, was given in 2008 9.5 million allowances, but had emissions equivalent to 22.3 million — a shortfall of 12.8 million.

But another reason power plants were given insufficient allowances was that they do not suffer any real negative effect from it — they simply pass on the cost to their customers in the form of higher electricity bills. So the ill-conceived ETS has resulted in households across Europe funnelling money into the pockets of some of the continent’s most polluting companies, who have no incentive to do anything in return, but just wait for the free money to roll in.

Increasing the EU’s 2020 emissions reduction target from 20 to 30 percent compared to 1990 levels would force a quicker burn through of the surplus but will not reduce the windfall. In fact, it might increase it, because the carbon price would likely rise. However, the Commission should scrap the rule that allows the 2008-2012 surplus to be carried forward to the next ETS phase. Of course in the face of the lobbying power of the steel industry and others, this is hardly likely to happen.

By Stephen Gardner

Original blog here.

Here’s a copy of the E.U. commissions emission report.

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Hackers Steal CO2-emission Permits Worth $4bn

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Another Carbon Fraud Raid Reveals Firearms, Piles Of Cash

In the early hours of Friday morning, UK tax authorities raided a series of homes and businesses nabbing four men that are believed to be part of an organized criminal gang suspected of ETS carbon trade fraud worth £38 million (€44m), according to the EUobserver.

“Criminals are criminals and will look to taking advantage wherever it is easiest for them.”

Europol spokeswoman


Large piles of cash and a stash of weapons were uncovered when investigators entered seven properties in the London and Leicester areas. The operation was part of  “a complex, 15-month investigation,” according to Her Majesty’s Revenue and Customs.

The arrests, of individuals between the ages of 29 and 53, are linked to raids that took place in August last year where nine people were arrested, the EUobserver writes.

However, the development is unrelated to the 25 arrests made earlier this month in the UK and Germany when authorities engaged in a blitz of raids on hundreds of sites in the two countries, including on Deutsche Bank and energy firm RWE, in a case involving the theft of an estimated €180 miillion from state revenues.

“The two investigations are completely separate,” a spokeswoman for HMRC told EUobserver.

The criminal activity the raids focussed on relates to what is known as “carousel fraud.” Criminals establish themselves in one EU member state and open a trading account with the national carbon credit registry.

They then buy carbon credits in a different country, which makes them exempt from VAT.

These are then sold to buyers in the original country, but with VAT slapped on, although the VAT then just disappears along with the trader and the money never arrives in government coffers.

Last December Europol, the European criminal intelligence agency, last December issued a warning that ETS fraud across the EU had resulted in around €5 billion in lost revenues.

In response to the concerns about the attraction of the ETS to fraudsters, the UK government has reduced to zero the rate applied to emissions credits, effectively making them VAT-free.

Criminals cannot steal tax revenue that the government has decided it will no longer collect.

“Criminals are criminals and will look to taking advantage wherever it is easiest for them. Before it was mobiles and computer chips. Right now, they think the ETS is a good bet,” said the spokeswoman.

“If there’s a window or loophole, they will try to exploit it. EU member states need to take the action they need to take in this matter, but it is them to put forward what it is they need to do.”

At the EU level, a new EU directive on reverse charges for emissions trading, which aims to close off this form of tax fraud, was implemented in February.

Original post here.

Related by the Econotwist:

Hackers Steal CO2-emission Permits Worth $4bn

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Living In A Derivative World

Italy Charge Foreign Banks With Fraud

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Hackers Steal CO2-emission Permits Worth $4bn

Emissions trading registries in a number of EU countries were shut down this week as a result of a phishing scam, tricking traders into giving away their emissions allowances. A handful of firms fell for the trap and ended up giving away their CO2 emissions allowances to the crooks, who will now be able to sell the permits worth a total of USD 4 billions.

“This happens to banks, Visa, Mastercard about once or twice a month. And this is the same sort of thing. It’s not something intrinsic to the ETS. This could happen to anyone.”

Barbara Helfferich


The European Commission told EUobserver that illegal transactions so far had only been reported in Germany and the Czech Republic. Brussels says that the registries will re-open once they have taken the appropriate measures to deal with the scam, including warning users and resetting passwords.


Although emissions trading was still able to continue via the European Emissions Exchange, registries in nine member states – Belgium, Denmark, Spain, Hungary, Italy, Greece, Romania and Bulgaria Germany – closed to prevent any further losses, according to reports in the German press. Other national registries, notably those in Austria, the Netherlands and Norway, were quicker to react and while registration was suspended in these countries as well, they reopened on Tuesday.

The European Commission told EUobserver that illegal transactions so far had only been reported in Germany and the Czech Republic. Brussels says that the registries will re-open once they have taken the appropriate measures to deal with the scam, including warning users and resetting passwords.

Similar to online banking scams in which an email directs you to a website that is a copy of your own bank’s webpage, and then asks for your bank details, these criminals reproduced the sites of the German and Czech registries. The criminals sent emails last Thursday to firms in Europe, Japan and New Zealand, asking them to offer up their registration details.

A handful of firms fell for the trap and ended up giving away their CO2 emissions allowances to the crooks, who will now be able to sell them on. Financial Times Deutschland on Wednesday reported that one firm had lost €1.5 million as a result.

The European Commission, like any bank or online shop facing the same situation, is caught between the need to get out the word to firms to prevent them falling for the trap and undermining confidence in the Emissions Trading Scheme (ETS) by publichising the fact.

“We have to be careful not to blow this out of proportion,” EU environment spokeswoman Barbara Helfferich told EUobserver. “This happens to banks, Visa, Mastercard about once or twice a month. And this is the same sort of thing. I receive these emails all the time. I just delete them.”

“It’s not something intrinsic to the ETS. This could happen to anyone.”

Well, the good news must be that emission trading finally seem to be taken seriously.

Link to original article.


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