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Thread: Systemic fraud in EU ETS: Cabon trading equal to the next sub-prime?

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    Default Systemic fraud in EU ETS: Cabon trading equal to the next sub-prime?

    You would think this news story would be of interest to the general public, especially since the carbon market is set to grow to 3 trillion USD in the coming years.

    Sub-prime anyone?

    EUOBSERVER / BRUSSELS - The EU's flagship mechanism for combating climate change, the Emissions Trading Scheme (ETS), has been revealed as a magnet for tax fraud on a grand scale, costing government coffers around €5 billion euros.
    Below we see how effective it really is:

    "stop climate change" you say? Well certainly not by means of market based principles which gamble upon the value of an intangible commodity.


    As soon as this particular loophole was closed in the few member states that did deal with the problem, as much as 90 percent of the trading volume disappeared.
    EUobserver / EU emissions trading an 'open door' for crime, Europol says
    Last edited by Sucker Punch; 30th December 2010 at 11:48 PM.
    The love of equality in a democracy, limits ambition to the sole desire, to the sole happiness, of doing greater services to our country than the rest of our fellow citizens - Montesquieu

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    Default Is a bureaucratic monster being created here?

    The idiocy of emissions trading appears to be taking on even greater proportions. Originally imagined as the flagship means to tackle climate change, it would appear to be exacerbating the problem. Take one of the examples explained below by the following Der Spiegel article:

    A byproduct of obsolete coolant-manufacturing facilities also known as fluoroform, HFC-23 is estimated to be 11,700 times more environmentally harmful than carbon dioxide. Thus, if a company renders one metric ton of HFC-23 harmless, it can pocket emissions certificates worth 11,700 metric tons of CO2.

    Of course, factory operators in India and China know what can be used to replace HFC-23, and many of them have switched to producing alternative coolants. China even plans to invest $47 billion (€36 billion) in green energy. But they also know about the CDM reward system. Indeed, if the climate saviors hadn't come along and made polluting profitable, manufacturing these coolants would probably have been banned in China long ago, as it is in the European Union. But now it suddenly pays to keep old, environmentally harmful plants running and to catch the HFC-23 in oxidation devices...

    ...Lambert Schneider, an environmental expert at the UN's Bonn-based Climate Change Secretariat, succeeded in documenting the manipulation involved in these projects. Last spring, after analyzing all 19 HFC projects, Schneider concluded that many of them were extremely suspicious. In many cases, he found that the sideline business of disposing of exhaust gases had actually become the core business and that many facilities were still only in operation to earn HFC-23 emission certificates.
    The Lucrative Business of Polluting: Will Trading System Encourage Emissions? - SPIEGEL ONLINE - News - International



    At present the right to emit a ton of CO2 costs about €15. This is set to increase dramatically with the introduction of the third round of the European Trading System (ETS)


    The following are excerpts from another of Der Spiegel's report into the system's set up, it asks the pertinent question, will a bureaucracy on steroids solve the problem, and will these new markets be open to abuse, scams, and rigging?


    In the third and final phase, pollution rights will finally become a scarce commodity, marking the beginning of what is probably the biggest economic experiment since the end of socialism.

    ... emissions trading could also turn into a goldmine for speculators betting on the development of certificate prices. The CO2 market is still relatively small and poorly regulated. There are no position limits for traders, meaning limits on how many contracts they can buy or sell. Some fear that powerful financial jugglers could move prices at will, adversely affecting companies that depend on the certificates, because they would have to adjust to price fluctuations.

    The wild rollercoaster ride on the commodities markets, for metals like nickel and copper, for example, give a manager like Saarstahl CEO Klaus Harste every reason to be concerned. If the prices of CO2 certificates start fluctuating in a similar way, says Harste, it will become extremely difficult to estimate the cost basis for a steel plant. "It will get harder and harder to put together a business plan."
    Lastly, the twin track initiative of emissions trading and green energy production is contradictory, as governments spend billions subsidizing renewable energy, the demand for emissions certificates falls should they succeed in reducing emissions:


    This automatically makes it worthwhile for energy providers to return to burning dirty coal. "The subsidization of renewable energy is incompatible with emissions trading," says environmental economist Till Requate of the northern port city of Kiel, who is critical of the failed incentive policy.
    Dealing in Hot Air: The Pitfalls of Europe's New Emissions Trading System - SPIEGEL ONLINE - News - International
    Last edited by Sucker Punch; 30th December 2010 at 11:51 PM.
    The love of equality in a democracy, limits ambition to the sole desire, to the sole happiness, of doing greater services to our country than the rest of our fellow citizens - Montesquieu

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    I'd say they'll be cheering this news in Beijing!

    As idiot European governments hand them another trade advantage.
    We have got as much as we are going to get out of Europe; it is, now, time to leave!
    EUROPA CONVENTUS DELENDA EST!...Whistle out the marching tune.....27

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    It amazes me sometimes why the EU is so determined to destroy the EU.
    The love of equality in a democracy, limits ambition to the sole desire, to the sole happiness, of doing greater services to our country than the rest of our fellow citizens - Montesquieu

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    How ironic that a virtual attack should loot a virtual collateralised commodity.

    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.
    At least somthing is being recycled however, whether it will save the environment is another matter:

    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.
    EUobserver / Attacks force closure of EU's emissions trading system
    The love of equality in a democracy, limits ambition to the sole desire, to the sole happiness, of doing greater services to our country than the rest of our fellow citizens - Montesquieu

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    Got to admit though, it is an ingenious little scam. I suppose they them trade those carbon credits to major corporations for real money? If so then pollution is indeed actually the product that is being produced for it's own sake.

    I can't understand how those who came up with this scheme couldn't have foreseen this given the sheer mass of lawyers, corporate experts, environmentalists etc who must have had input, but then we have uttered the words in bold before with other commodities, excellent topic.

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    Quote Originally Posted by Thranduil View Post
    Got to admit though, it is an ingenious little scam. I suppose they them trade those carbon credits to major corporations for real money? If so then pollution is indeed actually the product that is being produced for it's own sake.

    I can't understand how those who came up with this scheme couldn't have foreseen this given the sheer mass of lawyers, corporate experts, environmentalists etc who must have had input, but then we have uttered the words in bold before with other commodities, excellent topic.
    Well that is just it, a scam presented in an inoccous way for simpletons, eco-mentalists or uber sleazy Green party politicians here in Ireland who aid and abet the scam for their own nefarious ends.

    Nothing to be surprised about as 99% of these scams are presented as being good for the environment e.g. saving the planet from climate change or what ever other snake oil is presented to screw the taxpayer

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    Last year Ireland fell short of its agreed emission reduction targets and had to buy circa 200 million euro worth of reductions from other countries.

    Trading and securitisation legislation is being brought in with the current Finance Bill.


    Section 37 amends section 110 of the Taxes Consolidation Act 1997
    which deals with the tax treatment of securitisation companies, in
    several respects:
    • Firstly, it extends the definition of qualifying asset in section
    110 to include plant and machinery, commodities and certain
    carbon offsets,
    • Secondly section 110 is amended to provide that an expense
    deduction for interest and other payments made to certain nonresident persons will be disallowed in the circumstances
    provided for in the legislation, and

    • Lastly, subsection (2) provides that the new legislation takes
    effect from 21 January 2011 in relation to assets acquired,
    securities issued or swap agreements entered into after that date.
    http://www.oireachtas.ie/documents/b.../b0811dmem.pdf
    The love of equality in a democracy, limits ambition to the sole desire, to the sole happiness, of doing greater services to our country than the rest of our fellow citizens - Montesquieu

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