Template:M intro emissions EUA theft
A strange artefact of all the carbon emissions allowances master trading documentation is their obsession with theft. What should happen if your emission allowances are, for want of a better word, nicked.
Now who, in their right mind, would want to steal emissions allowances? What would you do with them? Who would you sell them to? You might well ask: but the upshot is that, over a few months in 2010 and 2011 they did: in several incidents at different registries in different European states, the best part of 3 million Allowances — at the time trading at around EUR15 a piece — were stolen.[1]
| National registry | Allowances stolen | Date | Recovered? | Nicker’s location |
|---|---|---|---|---|
| Romania | 1,600,000 | 16th November 2010 | 600,000 | Lichtenstein |
| Italy | 267,911 | 24th November 2010 | unknown | unknown |
| Austria | 488,141 | 10th January 2011 | 488,141 | Lichtenstein and Sweden |
| Czech Republic | 950,000 | 18th January 2011 | 225,001 | Estonia |
| Greece | 300,000 | 18th January 2011 | unknown | unknown |
How did it happen?
Phishing, basically. In early 2010 phishers posing as registry administrators emailed thousands of registry account holders instructing them to disclose their user identification numbers and passwords on a fake registry website and scarfed 250,000 Allowances this way. Really: it seems lame but you have to remember it was a kinder, gentler time then. Later more sophisticated attacks happened between November 2010 and January 2011, prompting the European Commission to set in and suspend spot trading on 19 January 2011, and only permitting resumption when individual registries could demonstrate minimum security standards.
The stolen allowances accounted for about 0.003% of the market, and while a good proportion were recovered and returned to their owners some of the “tumbled” the Allowances through a series of onward transactions to make them untraceable — the same sort of thing happens on the blockchain to conceal drug transactions on the Silk Road, we hear, although it doesn’t work awfully well<ref>See Andy Greenberg’s excellent Tracers in the Dark: The Global Hunt for the Crime Lords of Cryptocurrency —
- ↑ See Nield, Katherine and Pereira, Ricardo: Fraud on the European Union Emissions Trading Scheme: effects, vulnerabilities and regulatory reform. European Energy & Environmental Law Review 20 (6), pp. 255-289.