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Europol: Emission trading fraud costs Europe €5 billion

Bob Tippee

By the time it ended, the Copenhagen climate summit had become farcical enough to obscure an instructive disclosure that emerged in the confab’s early days.

At this writing, quarrelling summiteers were straining to assemble some token agreement that would keep their effort from looking like more than an international contest for other people’s money.

Not even Nobel Laureate Barack Obama, who took time off from his health-care fiasco in the US to prod international leaders into valiant combat against climate variation, could rescue the moment.

Glaciers, therefore, seem destined to continue melting, which they were going to do no matter what happened in Copenhagen.

A greater hazard to human well-being lurks in the US Congress, where Obama’s political party is fragmenting over a thunderously unpopular campaign to overhaul health care.

The danger is that Democratic social engineers will channel their frustration over an inevitable health-care retreat into a reinvigorated push for greenhouse gas emission control via cap-and-trade.

It’s on that threat to prosperity that a report by Europol, the European law-enforcement cooperative, has much to teach.

On Dec. 9, Europol said the European Union’s Emission Trading System, a cap-and-trade scheme, had been fleeced for €5 billion in the preceding 18 months by fraudulent trades.

“It is estimated that in some countries up to 90% of the whole market volume was caused by fraudulent activities,” it said.

Criminals apparently had been buying emission allowances in countries where they didn’t have to pay Europe’s value-added tax (VAT) and reselling in VAT countries, collecting the tax from buyers and disappearing without passing the money on to authorities.

Suspicion arose in response to unprecedented increases in emission trading in late 2008. After France, the Netherlands, the UK, and Spain changed tax rules to prevent exploitation, market volume dropped by as much as 90%.

The ever-present threat of trading fraud is a powerful reason for the US to spurn cap-and-trade.

Congressional supporters of the approach insist they can fashion controls that will keep emissions trading within honest bounds.

But they’re largely the same people who, behind closed doors, are turning health care into political hash.

This feature will appear next on Jan. 8, 2010.

(Online Dec. 18, 2009; author’s e-mail:

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