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Brussels, 21 January 2011
Emissions Trading: Q & A following the suspension of transactions in national ETS registries for at least one week from 19:00 CET on Wednesday 19 January 2011
Why has the Commission shut down the European carbon market?
The Commission has not shut down the European carbon market. The Commission has temporarily removed the possibility for account holders in national EU ETS registries to initiate certain transactions, notably external and internal transfers of allowances and Kyoto Protocol units.1 This implies that delivery of allowances cannot be executed. Since the European carbon market consists mainly of futures, where delivery does not take place immediately, this suspension of certain transactions will have a minimal effect on the overall market. It affects only the spot market, which accounted for less than a fifth of overall market activity in 2010.
Why did the Commission decide to suspend transactions in national EU ETS registries?
The Commission decided to suspend transactions in national registries following a series of cyber attacks. Three attacks have taken place since the beginning of the year and other registries are known to be vulnerable to similar attacks.
EU ETS legislation allows the Commission to suspend access to national registries if there is a security breach that threatens the integrity of the overall registries system.
In actual fact, the Commission has not suspended access completely; the normal cycle of allowance allocation, submission of verified emissions and surrender of allowances and Kyoto Protocol units for compliance purposes can continue.
What is the volume of allowances stolen due to the security breaches?
The situation is not clear as some national registries have not confirmed the number of allowances affected. The Commission's best estimate is that roughly 2 million allowances, representing a total of less than 0.02 % of allowances in circulation, have been illegally transferred out of certain accounts.
Which national registries have inadequate security standards?
The Commission is in the process of collecting comprehensive information and discussing with national authorities the exact requirements for the re-activation of national registries. At this stage no further information can be made available.
Will the Commission maintain the suspension until it is satisfied that all national registries are secure?
The Commission will discuss with Member State experts the criteria under which a registry will be allowed to resume all types of transactions. Once the agreed criteria have been met by a given registry, the suspension will be lifted for that registry. In this way, a phased return to normal business will be achieved.
Credits (known as certified emission reductions or CERs) from Clean Development Mechanism projects, credits (known as emission reduction units or ERUs) from Joint Implementation mechanism projects.