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Wednesday, March 17, 2010

Carbon trading halted due to 'possible fraudulent conduct'

In the underworld of carbon offsets, the United Nations shows its hopeless inability to manage expensive Utopian boondoggles. Unelected, unaccountable grifters allow siphoned fortunes to be casually wasted. In this one example, Hungary sold 2 million expired United Nations certificates.
  • Abyd Karmali, managing director and head of carbon emissions at BofA Merrill Lynch, said today at the Bloomberg New Energy Finance conference today in London."...
Bloomberg: "The European Union said it was “surprised and concerned” to learn that some United Nations credits have re-entered the carbon market even after being surrendered for compliance
  • in the bloc’s cap-and-trade program.

The EU statement came in response to a dispute that may bring trading of UN carbon credits

  • to a “grinding halt,” according to a managing director at BofAMerrill Lynch.
  • BlueNext SA and Nasdaq OMX Inc.
  • reacted by halting spot trading today of UN credits until they can determine

what happen to offsets sold by Hungary after they were turned in for EU credit.

The European Commission, the EU regulatory arm that oversees the world’s biggest carbon market, will investigate “further interim measures” that could be taken to stave off

  • concerns that investors may get stuck with
  • UN Certified Emission Reduction credits

that won’t be valid again in Europe, it said in an e-mailed statement today....

  • Hungary made it clear when it sold the permits that they couldn’t be used again in the EU system, the country’s Environment Ministry said today in a statement. There may have been
  • fraudulent conduct” by a dealer if the credits ended up on EU markets, the statement said....

The UN ...said the EU is responsible for protecting buyers. ...

  • The UN sets the rules for how CERs can be used to comply with emission-reduction targets set for nations bound by the
  • 1997 Kyoto Protocol. The EU oversees the use of CERs in Europe’s cap-and-trade system....

Hungary’s sale of UN credits that were previously surrendered in the European Union program is reducing demand in the world’s second-biggest emissions market, a JPMorgan Chase & Co. executive said.

  • The supply and demand dynamics have been changed,” said Paul Kelly, chief executive officer of
  • JPMorgan’s EcoSecurities unit. While the scope of the problem has yet to be determined, buyers are

questioning the authenticity” of what they are buying,

  • he said today at the New Energy Finance conference."
"EU 'Surprised' at CO2 Recycling; UN denies blame," Bloomberg, Business Week, 3.17.10, via Tom Nelson ******** "Carbon permits submitted by companies every year to the national register are usually cancelled. However, Hungary exploited a loophole that allows CERs — which are issued not by European Union governments

Investors in the carbon market took fright as it emerged that some of the Hungarian CERs had found their way back into the market, despite having been used to meet the carbon targets of Hungarian companies.

The double counting is threatening confidence in the ETS, according to staff at one energy consultancy. Icis Heren said: “For companies

  • obliged by law to buy carbon credits ... government-led carbon credit recycling means they risk

The Hungarian Government said that the used CERs were sold to non-European investors,

  • but BlueNext said that it had found some of the suspect CERs trading on its system.

The ETS, which was intended to create a market incentive for companies to reduce their carbon emissions, has suffered from repeated crises of confidence. At first, too many carbon allowances, known as EUAs, were issued by individual governments, creating a glut and a

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