Hacker Stole Half A Million Pollution Permits

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Nearly half a million pollution permits were stolen from a Czech carbon bank this week. The event put the spotlight on an emerging black market for the right to pollute the planet, and shut down much of the European carbon trading scheme

The stolen permits would allow a company to pollute the atmosphere with almost half a million tonnes of carbon. Known as European Union Allowances (EUAs), they are distributed by the EU as part of its carbon trading scheme, set up to help the bloc of nations meet its Kyoto protocol targets.

Major companies can emit only as much carbon dioxide as their allocated EUAs allow. If they want to emit more, they must buy spare carbon permits from others. The pilfered permits could thus enter a black market in permits.

475,000 tonnes
On Tuesday, a Prague-based carbon bank called Blackstone Global Ventures announced that someone had hacked into the Czech national carbon registry and transfered 475,000 EUAs from its account. Each EUA represents a tonne of carbon and the total value of the stolen permits was around €7 million.

Blackstone acts as a broker, pooling EUAs from companies with spare permits and selling them to others that need extra to offset their own emissions.

According to Point Carbon, an energy and carbon market news service, the thief swiftly transferred the stolen permits to a registry in Poland, then to others in Estonia and Lichtenstein, before they disappeared altogether. Reuters reported that other unnamed carbon account holders were also raided.

The Czech thefts are negligible in the overall volume of trade in EUAs. But they are not the first. In November, 1.6 million EUAs disappeared from the carbon account of cement maker Holcim, held in the Romanian national carbon registry. And earlier this month, someone tried to hack into the Austrian registry.

The string of thefts threatens to wreck confidence in the European market, according to Point Carbon's carbon market manager Kjersti Ulset. That could have wider repercussions: the European market is widely seen as a model for a future global market.

Stalled
By today, five national registries in Austria, the Czech Republic, Greece, Estonia and Poland had halted all trade while they review security. They also want to avoid inadvertently trading in the stolen EUAs.

In theory, the stolen carbon credits should be identifiable by their serial numbers. This ought to make it impossible for anyone to sell them or use them to offset their own emissions. But, as with stolen banknotes, that might be easier said than done.

Bookkeeping in the European market is far from watertight. Past scams have included the sale of carbon credits more than once, so that they end up being used to offset emissions twice or more. Cleansing the system of fraud may prove hard.