Up to 90% of carbon credit trading within the EU Emissions Trading System (ETS) has been caused by fraudulent activities causing member states to lose approximately EUR 5 billion in taxes ($7.3 billion), EU’s law enforcement organization Europol said today.
“These criminal activities endanger the credibility of the European Union Emissions Trading System and lead to the significant loss of tax revenue for governments”, said Europol Director Rob Wainwright.
Europol said suspicions of carousel fraud – a scheme in which traders repeatedly sell carbon credits and collect the accompanying VAT but then fail to hand it over to the government – first arouse in late 2008 when several market platforms saw an unprecedented increase in the trade volume of European Unit Allowances (EUAs). The market volume peaked in May of 2009 at a time when the market price of 1 EUA – which equals 1 ton of carbon dioxide – was around EUR 12.5.
The European Union has committed to reducing 20% of their carbon emissions by 2020, and EU leaders attending the UN Climate Change Summit in Copenhagen have said that the cuts can be increased to 30% providing other parts of the world agree to make the same kind of contribution. President Obama, who is expected to attend the Copenhagen conference next week, has said he will put on the table a U.S emissions reduction target of 17%.
The EU cap and trade system was introduced in 2005 and the EU carbon market is estimated to be worth around euro 90 billion – approximately $131 billion- a year.
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Comments
Wow! Is this what the U.S. has to look forward to with cap and trade? Great story, Caroline.
Honestly, did anyone really think cap-and-trade was about saving the planet. Cap-and-trade is, at its origin, the brainstorm of Ken Lay of Enron fame devised for the greater glory (wealth and control)of his corporation. Then the "big boys" saw its potential and the rest is history. My only surprise is that the cap-and-trade fraud in Europe is of such a crude smash-and-grab sort. Or possibly, there are other more sophisticated frauds that go discreetly unreported. Maybe not, of course, but not the sort of thing we're ever likely to know one way or the other. Thank heavens the U. S. hasn't gotten into this cap-and-trade business.
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