Hackers Disrupt EU Carbon Markets


The European carbon markets were abruptly closed last week in response to a series of cyberattacks on the registries used to track carbon allowances. The European Commission announced on January 19th that it was implementing "transitional measures" which would prevent allowances from being traded. In its statement, the Commission noted that it was working with the national operators of allowance registries to patch security holes that had enabled hackers to steal about 2 million allowances.

In a Q&A document that accompanied the announcement, the Commission refuted the claim that it had "shut down" the carbon market, noting that trades of actual allowances accounted for only about 20% of market activity in 2010. The majority of market transactions involve futures.

However, shortly after the Commission announced the suspension of allowance transactions, ICE Futures Europe suspended trading of futures contracts for EUAs and CERs. ICE Futures Europe handles about 90% of the trading volume. The markets were therefore effectively closed on January 19.

Earlier this week, the Commission released an update saying that EU members reached agreement on guidance for the minimum requirements that each national registry has to fulfill in order to resume normal operations. The Commission is now waiting for written confirmation from each of the national registries that these revised standards have been met. Pending that confirmation, trading in allowances will continue to be suspended. ICE announced yesterday that futures trading would also remain suspended at least until February 1.

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