UPDATE 2-EU halts carbon market as permits feared stolen

Wed Jan 19, 2011 12:26pm EST
* EU suspends nearly all transactions in EU ETS
* BlueNext suspended all carbon trading from 1600 GMT
* Czech, Estonia, Greece and Poland join Austria
(Updates throughout)

By Nina Chestney and Pete Harrison
LONDON/BRUSSELS, Jan 19 (Reuters) - The European Commission
on Wednesday halted its emissions trading scheme (ETS), its
chief weapon against climate change, after allegations that
permits worth millions of euros had been stolen.

The Commission said the suspension of most transactions
would last until at least Jan. 26 and only the allocation and
surrender of carbon allowances would be allowed.

The move follows a decision by France's BlueNext spot
emissions exchange to halt trade and several EU member states'
closure of their carbon registries after permits worth 6.7
million euros ($9.02 million) were allegedly stolen.

The Czech Republic, Greece, Estonia and Poland closed their
carbon trading registries earlier on Wednesday, joining Austria.
BlueNext said in a note to its members that it suspended all
trade from 1600 GMT due to demands for action over the security
breach involving EU Allowances (EUAs).

"(...) There was strong demand to filter out the allegedly
stolen EUAs and place them into isolation," the exchange said.
The benchmark EUA contract CFI2Zc1 fell 21 cents to 14.41
euros a tonne at 1646 GMT.
"All traders have left the market. This is serious," an
emissions trader told Reuters.

In the last two years the EU ETS, which limits carbon
emissions by factories and power plants, has had to contend with
upsets including the re-sale of used carbon credits, a phishing
scam and continuing VAT fraud.
Source: Reuters.Com