Financial crimes in the European carbon markets

Nield, Katherine; Pereira, Ricardo

doi:10.4337/9781784710620.00018

Cited by 6 publications

(16 citation statements)

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“…The buyer resells the carbon credit domestically and would have to pay VAT to the national government. This process can occur countless times, with VAT being charged each time the circle is passed [69]. However, before the national authorities can invoice the VAT, the intermediary has disappeared.…”

Section: Expected Fraud Reduction Opportunitiesmentioning

confidence: 99%

“…According to this option, the VAT payable on the supply is shifted to the person receiving the supply instead of the vendor. In combination with the definition of EU ETS allowances as financial instruments, future VAT frauds are expected to be reduced [69]. Notwithstanding, this form of fraud remains to some level as the reverse charge mechanism's implementation leaves regulatory gaps.…”

Section: Expected Fraud Reduction Opportunitiesmentioning

confidence: 99%

“…Currently, an insecure registration process, as well as the various legal security standards, lead to a considerable susceptibility to fraud in the trading system. In 2010 and 2011, for example, a total of 3,606,052 emission certificates were stolen in Romania, Italy, Austria, the Czech Republic, and Greece, of which only 36% were verifiably returned [69]. Therefore, the European Commission has installed a union registry in 2012, which combines the individual existing EU ETS registries into a central EU registry, with the purpose of limiting emissions trading fraud.…”

Section: Expected Fraud Reduction Opportunitiesmentioning

confidence: 99%

“…(Article 19) amended on 08.04.2018, DIRECTIVE 2003/87/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL. However, a certain fraud potential remains due to the uncertainty regarding nonreturned or untraced stolen emission allowances and future internet security risks [69].…”

Section: Expected Fraud Reduction Opportunitiesmentioning

confidence: 99%

See 3 more Smart Citations

A European Emissions Trading System Powered by Distributed Ledger Technology: An Evaluation Framework

Mandaroux

Dong

Li³

2021

Sustainability

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The European Union Emissions Trading System (EU ETS) is a major pillar of the European energy policy to reduce greenhouse gas emissions. However, the reportedly pervasive frauds in this market are constraining the beneficial role of the EU ETS. In this conceptual paper, we propose to digitalize the EU ETS by distributed ledger technology (DLT), enabling the verification of authenticity and provenance, proof of ownership, and lifecycle traceability of carbon certificates and assets. Our platform allows verifiable credentials to validate emission allowances, real-time tracking of trading participants’ emissions, and the audit trail reporting of the decentralized trading records. Furthermore, we complement the DLT application concept with a structured interdisciplinary evaluation framework. Our framework and analysis aim to stimulate further interdisciplinary research in this area to support regulators, such as the European Commission, in designing effective digital emissions trading systems.

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Section: Expected Fraud Reduction Opportunitiesmentioning

confidence: 99%

Section: Expected Fraud Reduction Opportunitiesmentioning

confidence: 99%

Section: Expected Fraud Reduction Opportunitiesmentioning

confidence: 99%

Section: Expected Fraud Reduction Opportunitiesmentioning

confidence: 99%

See 2 more Smart Citations

A European Emissions Trading System Powered by Distributed Ledger Technology: An Evaluation Framework

Mandaroux

Dong

Li³

2021

Sustainability

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“…The evaluation of the counterparty's security level is based on qualitative observations, without involving a formal liability risk assessment (Governor Brown 2013: 3; 2017: 4). After the lessons learned from fraud and allowance theft in the EU ETS in 2009-2012 (Nield, Pereira 2016), the upgraded, centralized Union Registry of the European program has prevented similar incidents, by offering a high level of protection for data exchange and for transactions (Regulation [EU] 2019/1122). Therefore, the EU ETS is likely to fulfill these liability risk criteria established by California's Regulation.…”

Section: Linking Requirements In European and Californian Legislationmentioning

confidence: 99%

Linking the EU ETS with California’s Cap-and-Trade Program

Kotzampasakis

Woerdman

2020

CEREM

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Aim: This paper aims to evaluate the legal barriers and policy obstacles to linking the European Union Emissions Trading System (EU ETS) with California’s Cap-and-Trade Program in the United States, and to identify potential legal solutions to overcome them, by taking a law and economics perspective. Design / research methods: A qualitative law and economics analysis is performed by combining the legal-dogmatic method with insights from economic theory. Primary sources are the respective legal frameworks, ETS regulations, past linking agreements and relevant case law. Secondary sources include the relevant legal and economic literature, as well as policy documents, reports and press releases. Conclusions / findings: An EU-California linkage of emissions trading systems (ETSs) is legally feasible on the basis of an informal agreement, through reciprocal amendments to the respective ETS-regulations. Potential barriers could emerge, in particular from misaligned provisions regarding price containment measures and offsets. A gradual implementation of certain mutually beneficial ETS reforms, possibly in conjunction with initially restricted linkage, can provide momentum for transcending these barriers. Originality / value of the article: To date, no linking has taken place between emissions trading systems from different continents. This paper contributes to the legal-economic literature on linking the EU ETS with California’s Cap-and-Trade Program by performing an up-to-date analysis of its associated barriers and by providing concrete legal suggestions to possibly overcome them. Such a transatlantic linkage could enhance the cost-effectiveness of climate policy and contribute to the bottom-up expansion of carbon markets worldwide.

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Green Supply Chain Management

Albrecht

2021

International Series in Operations Research &Amp; Management Science

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Financial crimes in the European carbon markets

Cited by 6 publications

References 0 publications

A European Emissions Trading System Powered by Distributed Ledger Technology: An Evaluation Framework

A European Emissions Trading System Powered by Distributed Ledger Technology: An Evaluation Framework

Linking the EU ETS with California’s Cap-and-Trade Program

Green Supply Chain Management

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