Austria Says It Has Got Back 237,100 Frozen CO2 Certificates From Sweden

Q

By Boris Groendahl and Ewa Krukowska - Apr 7, 2011 12:54 PM GMT+0300

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Austria said it got back carbon permits illegally transferred toSweden in a hacking attack on the European Union emissions-trading system in January.

Thieves transferred more than 2 million allowances valued at around 34 million euros ($49 million) at today’s prices from accounts in carbon registries in Austria, the Czech Republic and Greece earlier this year. The Austrian Emissions Certificate Registry, which earlier said 488,141 permits missing from its accounts were found in Sweden and Liechtenstein, announced today that 237,100 allowances were returned from a Swedish account.

“The transfer was executed by a Swedish court order, which not only imposed the legal confiscation, but also their return to Austria,” the registry said in a statement from Vienna today. “The certificates frozen in Liechtenstein will probably be returned to Austria in the next few days.”

The cyber-attacks roiled the European carbon market, the world’s biggest, and prompted the EU to shut all registries in the bloc’s emissions-trading system. The closure drove spot markets to a halt for 15 days before the first registries, which track transactions and ownership of permits, were allowed to reopen. Each permit gives its holder the right to emit one metric ton of carbon dioxide.

EU nations are working with Europol and other institutions to recover the stolen permits, Jos Delbeke, director general for climate at the European Commission, said on March 22. Thecommission supervises the emissions trading system, known as the ETS and covering 27 EU nations as well as Iceland, Liechtenstein and Norway.

Czech Republic

The Czech Republic, which lost around 1.3 million permits in the hacking attacks, said last month it will replace the allowances stolen from the accounts of the Brno-based trader Blackstone Global Ventures and power company CEZ AS. (CEZ)

Even though the allowances stolen by hackers in January account for only 0.01 percent of the EU annual cap, the attacks hurt the reputation of the ETS and sparked criticism from some analysts that the supervision of the system is not adequate. The theft followed instances of “carousel fraud” involving value- added tax collection and password “phishing” last year.

EU permits for delivery in December fell 0.2 percent to 17.12 euros as of 8:35 a.m. on the ICE Futures Europe exchange in London. They have gained 20 percent so far this year.

Better Security

The commission has already demanded that national registries implement additional identification checks and prove they meet minimum security requirements and is now working on regulatory changes that may be presented as soon as this month.

The proposals to modify the rules for registries will probably include a delay in delivery of spot permits, Yvon Slingenberg, head of the emissions unit at the commission, said last month. The spot carbon market accounts for 10 percent to 15 percent of emissions trading in the EU, according to the commission estimates.

The delay and most of other changes to be proposed will be applicable for a single registry, which will replace national emissions centers in the next phase of the EU program starting in 2013. Some measures may also become mandatory in the current trading period, which began in 2008, Slingenberg said.

The EU is also working on improved oversight measures for spot carbon trading. While the futures market is already subject to the EU regulation on financial markets, options on the table for spot emissions trading include extending this regulation and creating a tailor-made regime.