Some EU carbon credit registries could be closed ‘for weeks’

The European Emissions Trading System has often been at the centre of controversy. However, in spite of the uncertainty surrounding the market, prices have remained stable and even risen. This may suggest the market is more resilient than many assume.

SBB 27 January Europe’s carbon credit spot markets remained closed for business yesterday as national carbon registries remained unable to transfer credits. Furthermore, the most troubled registries could remain closed for far longer than expected. OTE, the company responsible for the Czech registry, has told Steel business Briefing that re-opening could be ‘a matter of weeks’ rather than days.

The theft of 450,000 European Union Allowance (EUA) carbon credits from the Czech registry and a hacking attack on the Austrian registry led the European Commission to block transfers of carbon credits until at least 26 January, as previously reported.

The registries hold the carbon credit accounts of participants in the Emissions Trading System (ETS). EUAs can be used to account for greenhouse gas emissions equivalent to one tonne of carbon dioxide each by European industrials in the ETS. It does not appear that steelmakers’ EUAs have been taken.

Registries will now remain closed until an independent assessment of security has been carried out on a country-by-country basis and this has been verified, the European Commission says. However, registries which have been affected by theft must also prepare a full report, which will delay re-opening even further.

The carbon market is unlikely to be strongly affected, analysts tell SBB. Spot trade can be as little as 5% of an exchange’s trading volumes, says Trevor Sikorsky, head carbon analyst at Barclays Capital. “It is a big blow to the image of the market…but it does not change the fundamentals,” Emmanuel Fages of carbon market analysts Orbeo adds. March 2011 EUA futures were settled at €14.69/t ($20.13/t) on 26 January on the London-based European Climate Exchange, up some €0.50 from a week earlier.


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