Scam Within a Scam- Hackers Hit EU Carbon Credit Exchange, Steal €30 Million in Carbon Credits

Trading on the European Union Carbon Exchange was halted after hackers made off with an estimated €30 million in carbon emission allowances from five European countries in late January.

The Czech Registry for Emissions Trading was one of the worst affected by the hack, losing 7 million euros worth of the pollution permits, known as EU Allowances (EUAs).

Some 2 million EUAs were stolen by hackers from Austria, the Czech Republic, Greece, Estonia and Poland within a few days. Each credit allows the bearer one ton of emissions and is worth 14 euros.

EU authorities say they suspect a phishing scam enabled hackers to log into unsuspecting companies' carbon credit accounts and transfer the allowances to themselves, allowing them to be sold on.

The credits are normally traded between companies that have a shortage of or excess emissions allowances for their current operations, and involve instant payment, meaning hackers can create accounts and then delete them as soon as they are paid.

Investigators in Greece have traced the thefts to at least 8 internet protocol addresses in Romania. Registry officials in Estonia and Germany say they have located some 610,000 allowances stolen from the Czech registry, but the theft not only highlights a lack of security on the international exchanges, but also raises concerns that credits purchased in good faith on the open market could turn out to be stolen from the registries.

Some of the markets reopened with limited activity on Feb 3rd after giving "reasonable reassurances that the minimum security requirements are in place".

It is not the first time the ETS has suffered a security breach. The system was hit by a phishing scam last year that saw 13 European markets shut down, while a cross-border fraud scam in 2008 and 2009 netted criminals 5 million euros, according to Agence France-Presse.

I could go on about how such 'cap and trade' or climate or carbon Exchanges are pretty much worse than useless, but they do a bang up job of explaining that all by themselves- however unintentionally. Hell, Chicago's much-ballyhooed Climate Exchange shut down at the end of 2010.

Leaving aside the fact that such a system would arbitrarily place limits on output from manufacturing, transportation, utilities and energy exploration, how exactly would these trading mechanisms be enforced? It would require a massive bureaucracy and even more red tape- think along the lines of 0bamacare's 1099 mandate, only for air instead of healthcare.

All while obstructing further exploration and drilling for oil in Alaska and the Gulf of Mexico, coal in West Virginia or natural gas in the Marcellus shale. This in turn has already driven up energy costs and will only further America's dependence on energy imported from unstable or belligerent nations.

And if anybody think the above problems will magically go away thanks to some sort arbitrary imposition of cap and trade of carbon exchange scheme, I have a bridge in Brooklyn couple of EU carbon credits to sell you.