The UK will re-open its carbon trading registry tomorrow after getting the go-ahead from the European Commission that its system is secure enough against fraudsters that forced the world’s biggest emissions trading system to close down three weeks ago.
In a written statement this morning, Energy and Climate Change Minister Greg Barker said the Government had received confirmation from the European Commission (EC) that the
UK registry could re-open. France, Germany, the Netherlands and Slovakia were also cleared to reopen their national registries after giving "reasonable assurances" that enough security was in place to prevent another fraud.The EC closed down all on EU member states’ registries three weeks ago following a number of
cyber attacks on the
European Union Emissions Trading System (EU ETS), which led to credits worth £28 million being stolen.
During the last week, the UK and other member states have been presenting evidence about the security of their registries to the EC, which is requiring a minimum standard of security at each registry before it will allow trading to resume.
"The UK registry is widely seen as one of the most secure registries in Europe with at least one market participant recommending this week its clients should use the UK registry," Barker said. "The UK’s registry administrator, the Environment Agency, earlier this week submitted the required evidence to the Commission. We have received confirmation this morning that the UK registry will reopen on Friday 4 February at 7am."
Cyber attack
The suspension of EU registries began on January 10, when Austrian authorities had to stop emissions trading at their registry because of a cyber attack. The problem then spread to registries in the Czech Republic, Greece, Estonia and Poland.
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.
Confidence in the system
Losses to traders and companies are thought to have run into the tens of millions of pounds due to the closure, however these losses have been limited because the suspension has only affected trading of credits for immediate delivery – called spot trading – which makes up 10 per cent of the market. The remaining 90 per cent of the market, which deals in futures and options, has seen less disruption.
However, the incident, which follows other fraud attacks, is undermining confidence in carbon trading and the EU ETS, which is held up as a model for other countries to follow. The scandal has also had an impact on the carbon price, which rose by over 50 Euro cents during four days of the crisis.
The UK Government said today it would continue to lobby the EC for tighter security of registries across Europe to ensure confidence was retained in the carbon trading market.
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