Carbon Trading Halted After EU Exchange Is Hacked 228
chicksdaddy writes "The European Commission (EC) suspended trading in carbon credits on Wednesday after unknown hackers compromised the accounts of Czech traders and siphoned off around $38 million, Threatpost reports. EU countries including Estonia, Austria, The Czech Republic, Poland and France began closing their carbon trading registries yesterday after learning that carbon allowances had been siphoned from the account of the Czech based register. A notice posted on the Web site of the Czech based registry said that it was 'not accessible for technical reasons' on Thursday and the EC issued an order to cease spot trading until January 26 so that it can sort out what appears to be chronic security lapses within the system."
Re:Isn't this kind of thing impossible to steal (Score:4, Informative)
They may have sold the credits already. The WSJ piece [wsj.com] I submitted about this story has more details:
"It started when an anonymous caller on Tuesday morning told Czech State Police that explosives had been placed at the offices of OTE AS, a private company that manages the Czech Republic's national registry. The police evacuated the registry for five hours.
During that time, the computer network wasn't monitored, OTE officials said. Hackers stole 475,000 allowances, worth 7 million, from a company called Blackstone Global Ventures, an environmental consultancy that trades carbon credits for industrial companies.
The thieves changed account-ownership information and executed illegal trades, said Nikos Tornikidis, a portfolio manager at Blackstone Global Ventures."
My guess is that they executed the trades and siphoned the proceeds off to a bank account somewhere.
Re:Wait, carbon trading wasn't a scam to BEGIN wit (Score:5, Informative)
Companies should not be permitted to purchase "credits" from companies that are in compliance.
"Compliance" is whether or not you are producing more carbon dioxide than allowed by the number of credits you hold. If a company pollutes more, but purchases the appropriate amount of credits, then they are in compliance, are following the law, etc. Sounds to me like you don't understand the point of cap and trade. They are an economically sound way to reduce overall pollution amounts, in other words, they address directly what pollution regulation tries to do indirectly. That is, cap net pollution from the entire system rather than capping individually pollution from each source.
Re:The what? (Score:5, Informative)
Entirely different; that's a carbon offset.
Carbon credits are part of cap-and-trade, in which CO2-producing industrial concerns have their CO2 production limited by law. Entities that are below their limit can essentially sell the difference between their limit and their actual CO2 emissions to other entities (who presumably would otherwise be above their limit).
If CO2 emissions were simply capped by law, industrial concerns would all have to make CO2 emissions reductions regardless of the cost-effectiveness of doing so. Adding the "and trade" component means that it becomes economically advantageous to make reductions wherever it is the most cost-effective. Since CO2 in the atmosphere doesn't care where it comes from, this means that CO2 emissions are reduced more for lower cost than with a cap-only system.
$7 million, not $38 million (Score:5, Informative)
The European Commission (EC) suspended trading in carbon credits on Wednesday after unknown hackers compromised the accounts of Czech traders and siphoned off around $38 million
According to Wall street journal [wsj.com] (original poster yuna49 [slashdot.org]) the latest theft was $7 million and the $38 million (0.02% of the market) is the total of the permits missing in action.
Re:How do you even liquidate (Score:4, Informative)
What a beautiful scam, declare a gas absolutely essential to life on the earth a poisonous taxable thing.
A few points:
* CO2 is, in fact, poisonous (well, toxic).
* CO2 emissions restrictions have nothing to do with whether CO2 is poisonous, since obviously it's not poisonous at atmospheric concentrations.
* "Essential to life" and "poisonous" (toxic) are not mutually exclusive. Besides carbon dioxide, there's oxygen and quite a few metals, to say nothing of fancier things like fat-soluble vitamins.
* "Essential to life" and "problematic in sufficiently large quantities" aren't mutually exclusive, either. Water comes to mind.
Re:Wait, carbon trading wasn't a scam to BEGIN wit (Score:5, Informative)
You mean paying another group to reduce pollution so you can pollute isn't a scam? It's a shell game whose goal isn't to improve things just to maintain the status quo. It's a pointless exercise. Offer companies tax credits to reduce emissions and fine them for exceeding but letting them pay to pollute is a joke.
I have a headache and I'm quite tired, so feel free to correct me if any of my understanding of the subject is wrong here.
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As I understand it, the basic concept is thus (shown via a hypothetical example):
1) The nation of Countrystan decides that there will be no more than 1,000 tons of carbon exhausted per year, by law, from certain industries.
2) Each business within the industry is allocated a certain number of "carbon credits" that effectively cap how much bad stuff they can spew into the air.
3) Since the total number of credits is a fixed number, any business that doesn't want to be hit with major fines will try to stay under their credits.
4) Businesses that are way below their credits can sell other businesses their credits. Businesses that may exceed their cap can purchase credits from other businesses, but the total number of credits (and thus the total amount of pollution) out there doesn't increase in any way.
5) Due to 4, there are economic incentives to reduce carbon output. Heavy polluters would likely need to buy extra credits, thereby incurring a cost that would offset any financial benefits of lackadaisical pollution control. Light (or non) polluters would (rather than a cost) receive a gain in revenue by selling their allotted credits to businesses that can't keep pace. Therefore, businesses stand to lose money if they pollute and gain money if they cut back on pollution, thereby providing the best kind of incentive (economic) for businesses to get their pollution under control.
6) Eventually, more businesses would have a surplus of credits that no one needs to buy. At this point, I imagine the total number of credits in circulation could be reduced.
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So, this is how I roughly understand the whole carbon credits thing is supposed to work. Am I right here? And does the real-world application work like this model, or is it rife with corruption, bureaucracy, and an inability to accomplish its stated goals like every other government project? Have their been any studies on the effectiveness of such a system?
Re:Wait, carbon trading wasn't a scam to BEGIN wit (Score:4, Informative)
Denying Climate Change is exactly like denying that you have cancer when your oncologist tells you that you do. It's easier on yourself to consider this reaction as scepticism, although you know that if you were really sceptical you would seek a second opinion rather than simply going home and ignoring the symptoms.
Understanding this reaction as denial helps the rest of us to see that these people are not insane, not necessarily dumb, and not necessarily evil - it is just taking them a little longer to work through the cognitive coping process. Also the term is a useful counter to the labelling of this reaction as scepticism - a term used deliberately to imply that it is the role of those who accept climate change to convince those who do not (a obviously absurd notion, when stated explicitly, which is why that rarely happens).