It looks like the European Carbon Trading Scheme is being hit by massive fraud.
Carousel fraud has found its way to the carbon market. The particularly European type of fraud entails setting up complicated import and export schemes between EU member countries, charging buyers for value-added tax in the country of destination, and then absconding with the tax rather than handing it over to the governments.So you have this imaginary quantity - one carbon credit - and people are surprised such a "commodity" is open to fraud? It shouldn't be a surprise. It should be a given.
In 2006 the UK and German governments embarked on a series of raids in 2006, and the UK introduced ‘reverse charging’ for VAT on certain items prone to carousel fraud. At the time carousel fraud was mainly seen as confined to small electronic goods such as mobile phones and computer chips.
A year later it was it was observed that fraudsters were simply moving away from those goods towards others that hadn’t yet been targeted by authorities. But it wasn’t until high volumes of trade were observed on France’s BlueNext carbon exchange this year that carousel fraud became an issue in the carbon markets.
Here are a few words from some one who saw it coming.
The [carbon offset] market requires validators and verifiers all over the world. The system is already short personnel with these skills. Then there is the question of who pays these people? Regulators need to keep in mind the failure of the credit rating agencies (Moody’s, S&P, etc.) in the recent credit crisis. Markets require trust. Respondents said the only reason certain investors purchased some MBS assets was the Triple-A rating. These same respondents say that a significant flaw in the system exists because the credit rating agencies are paid by the bond issuers. A disincentive exists for doing a thorough job. Currently, validators and verifiers are paid by project developers. If we are to learn from the failings of the financial markets, this is an aspect of the carbon offset markets ripe for misconduct.Well, well, well. Another government program that encourages massive amounts of waste fraud and abuse.
It was never about carbon emission reduction. It was always about government/elite Power and Control. In the sixties when I was on the left the slogan was "Power to the People" a traditional American value - perverted to be sure - but the slogan resonated with the American ideal of self governance. And what has the left got now? "Take Power From The People", both economic power and literally electrical power. Eventually people catch on to this sort of thing and in America they vote the rascals out. Faster please.
Cross Posted at Classical Values