The thing about carbon trading is that you are dealing in something you can't see, feel or touch. Carbon credits are a mathematical calculation of something that doesn't exist. I mean, how do you stock a warehouse with credits for tonnes of carbon dioxide that someone hasn't produced and want to sell?
Does this make carbon credits more vulnerable to electronic theft? That is a question that comes up with news that the European Union has halted transfers of carbon credits because hackers have broken into the registries of five mostly unnamed countries and stolen two-million tonnes worth of the credits potentially worth millions of euros. We have a wire story on that case here.
The Czech Republic's registry is one that is known. The New York Times is reporting comments from a trading firm that the Czechs lost 470,000 tonnes worth of the credits worth almost seven-million euros.
On the surface, one might argue that this doesn't necessarily say anything about the carbon market, and if it impugns carbon trading it tarnishes all financial markets since they all operate via vast, lighting-quick electronic networks with transactions trading theoretical bits and bytes of the things from copper futures to international currency. I mean, if one bank transfers $100 million to another bank, no one is sending a truck full of cash between the two.
However, copper futures are tied to physical metal, and if you use your computer to transfer your paycheque from one bank to your credit union, you can walk up to an ATM and withdraw cash.
"This is not good for the credibility of the market," explained Kjersti Ulset, head market analyst for Point Carbon, a Norway-based firm that closely follows the trading and was quoted by the Times. "But at the same time, it should be possible to find measures that will make it possible to avoid this in the future."
That about sums it up. In the meantime, the EU has said 14 of its 27 member countries need to boost their online security.
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