Carbon credits are on their way in the UK – and if the system is open to fraud, companies are advised to get solid IT support in place
Criminals have taken €5 billion (£4.5bn) in fraud from the European carbon trading scheme, prompting calls for organisations to take greater control of their carbon accounting.
The European Union (EU) Emission Trading System (ETS) has been the victim of fraudulent traders, who stole €5 billion from taxpayers, which in some countries made up 90 percent of the whole market volume for carbon credits, according to a release from Europol, the European law enforcement agency.
Carbon emissions are traded, as a way to penalise high emitters and reward those who can reduce their CO2 output, and reduce overall carbon emissions, in line with the goals of the UN climate change summit in Copenhagen. The trading unit is the European Unit Allowance (EUA), which is equivalent to one ton of carbon dioxide.
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Late in 2008, the volume of UEA trading went up suspiciously, peaking in May, with several hundred million traded in France and Denmark. The fraudulent trades, or “missing trader” frauds were the work of organised criminals, not firms taking part in the carbon credit exchange, and the fraud has been closed by changes to VAT rules, Europol said.
“These criminal activities endanger the credibility of the European Union Emission Trading System and lead to the loss of significant tax revenue for governments,” said Rob Wainwright, director of Europol, “Europol has therefore offered its support to the European Commission – DG Environment to safeguard the integrity of the Community Independent Transaction Log.”
Organisations will increasingly be drawn into emission trading schemes once the summit has set targets for reducing emissions – and the UK has already set a system in motion under the Carbon Reduction Commitment, whereby companies using more than a certain amount of power must register and account for their carbon use – although the majority of companies are not ready to take part.
The best way to avoid being implicated in any future carbon credit fraud is to ensure the integrity of the data they supply to such systems warned analysts. “Clearly time-stamped data will avoid fraud,” said David Metcalfe of Verdantix, who has previously warned that companies using general purpose tools such as Excel may be at risk.
European exchanges include the Climate Exchange in London, which was the target of protest from the Climate Camp in London in August. Protesters argued that carbon credits are a “false solution” to global warming, perpetuating emissions rather than eliminating them.