Security measures delay re-opening of carbon trading scheme

It was hoped the European Emissions Trading System (ETS) would re-open today, following last week’s suspension of carbon transactions when a £28 million carbon fraud affected a number of European member states, including the Czech Republic and Austria. But this afternoon it was still not clear when the flagship trading scheme would be up and running again as UK and other countries scrambled to gather evidence to show their registries were secure enough for 'spot' trading to begin again at exchanges. The suspension does not affect trading in futures and options. 

UK registry
The UK Government said this afternoon that it was working to ensure the UK registry was reopened "as soon as possible" but was unable to provide a timescale.

"On Monday the Commission and Member States reached an agreement on the minimum level of registry security required to reopen national registries," an Environment Agency spokesperson said. "The UK is currently working with its contractors in order to provide the Commission with the required level of evidence."

The UK Government says its registry is amongst the most secure in the EU, but it could be several days, possibly weeks, before it becomes operational again.

On Monday, the European Commission said "significant progress" had been made towards re-activating national registries, but it could provide "no estimate at this stage" about when the ETS would re-open. "This is in the hands of individual member states now, which have to mobilise the resources to upgrade security where needed," it said in a statement.

Cap-and-trade scheme
The EU ETS is a Europe-wide 'cap-and-trade’ scheme – the first of its kind – that was launched in 2005 by the European Union to help meet its greenhouse gas (GHG) emission targets under the Kyoto Protocol. It requires the most polluting companies to buy carbon certificates if they do not keep their CO2 output below their agreed quota.

The scheme has been held up as a model for other countries to follow, but this is the latest in a series of fraud attacks on the ETS and concerns are growing it could turn traders away as losses mount up. Losses to traders and companies are expected to run into the tens of millions of pounds while the system remains closed.