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16th Apr 2021

Attacks force closure of EU's emissions trading system

  • Europe's ETS system is the largest of its kind (Photo: DerGuy82)

A series of cyber-attacks on national registries where carbon permits are stored has forced the closure of the EU's emissions trading system (ETS) for at least a week.

The European Commission posted the announcement on its website on Wednesday (19 January) after Czech Republic-based firm Blackstone Global Ventures said about €6.8 million of carbon allowances appeared to have disappeared.

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Thefts on electronic registries in Austria, Greece, Poland and Estonia have also been reported in recent days.

"Incidents over the last weeks have underlined the urgent need" for enhanced security measures, the commission said while announcing the closure of the bloc's ETS system until at least the 26 January.

By placing a price on carbon, Europe's trading system is designed to lower company emissions and therefore protect the environment from global warming.

Firms received emission permits for free under the first phase (2005-2007) of the scheme, with some forced to pay for a portion of their permits under the current phase (2008-2012). Brussels wants to see energy companies buy all their permits from 2013 onwards, with other heavy industries gradually phased in by 2020.

The system is the world's largest of its kind, with US plans for a similar cap-and-trade scheme being blocked by the country's senate last year. China experts suggest pilot ETS projects could appear in Beijing's next five-year plan, set to be approved in March.

Despite its pioneering position, Europe's ETS system has attracted criticism over its six years of operation, with some businesses saying it threatens the bloc's competitiveness, while NGOs argue emission thresholds have been set too high.

Wednesday's announcement and similar cyber-attacks have also damaged the EU initiative, together with reports of tax fraud and the recycling of used credits.

"They will over time undermine the credibility of carbon trading as a policy measure," Kjersti Ulset said of the cyber-attacks. Ms Ulset is a manager at Point Carbon, a company that reports on Europe's emission trading, carried out in a network of registries across the union.

After noticing an unauthorised trade on its account on Wednesday, Blackstone contacted Czech registry OTE AS, which promptly closed operations and began an investigation.

Paris-based BlueNext SA, operator of the world's biggest spot exchange for permits, then followed suit, as did registries in Poland and Estonia before the EU imposed a region-wide shutdown.

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