Cyberthieves Target European Carbon Credit Market

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In a case that is every bit a 21st century crime both in terms of what was stolen and how, thieves in Europe have made off with about $40 million worth of carbon emission permits.

The permits are issued in Europe to try to fight global warming. Authorities allocate a quantity of permits to each country, and those levels can't be exceeded. Each country's government then issues those permits to companies that produce carbon — power plants or paper mills, for example.

"It is essentially an allowance," says Henry Derwent, president of the International Emissions Trading Association. "This piece of paper allows my company to emit a ton of carbon dioxide through a combustion process."

So that piece of paper has value. Companies that produce less carbon than they're permitted can sell what's left of their allowance to companies that produce more than they should. There's actually a market where these allowances are traded electronically.

Over the past few months, but especially in the last week, criminals have been able to break into one of the registries where those carbon allowances were recorded and change who owns what.

"If you make sure that it's transferred to an account that you own and you sell it very quickly, then you've essentially got something for nothing, sold it for a lot, and you get out of town with all the dollars in your bag," says Derwent.

A cybertheft like that would not have happened 20 years ago, nor would a carbon emission allowance have had any value 20 years ago. What this theft proves, Derwent says, is that in Europe carbon emission allowances are now seen as commodities like gold or wheat.

"That means that people treat it very, very seriously," he says. "But it also means that it's got value on the market, and if you find that you're not defending it as you would something of value, if your security is lax," then people who do recognize that it is valuable may try to steal it from you.

From Derwent's point of view, however, there's a silver lining to this story: It shows that European attempts to limit carbon emissions must be working.

On the other hand, if companies start worrying that their carbon allowances could get stolen, the whole system could fail. So the European Commission is anxious to put an end to this new crime. For the time being, trading in carbon allowances has been suspended.