(Dec. 05, 2010) Loopholes in the EU’s carbon credit trading scheme bring $7-billion in profits to scam artists.
Scam artists from around the world, capitalizing on lax regulations at the Danish emissions trading registry, have made off with an estimated $7-billion over the last two years, according to Europol. Denmark’s Office of the Auditor General is now investigating the fraud, which occurred after the Danish registry dropped requirements that carbon traders be documented. While allowing a free-for-all served the carbon market on the short term, by appearing to inflate the interest in carbon as a commodity, it ultimately backfired when much of the trading proved to be phony.
Aided by lax rules, the Danish emissions registry became the world’s largest, with 1256 registered permit traders, most of them fake. As one example, a registered trader used a London parking lot as his address. Following the discovery of the scam, some 1100 of these have been de-registered, leaving scant few traders in the Danish market.
The Danish Minister of Climate and Energy who oversaw the illusory growth in the carbon market, Connie Hedegaard, has since been promoted to the post of EU Climate Commissioner. She is now in Cancun, representing the EU’s interests and arguing for steps that the global community needs to take for the carbon industry to regain credibility.
This story, greatly underreported, came to me via a Norwegian reader, Geir Hasnes, who has translated one of the few press reports to have appeared. His translation appears here.
Lawrence Solomon is executive director of Energy Probe and the author of The Deniers.