Two months ago, I did a blog entry looking at how carbon trading regimes were easy targets for organized crime. That's inevitable because the rules are still being set. Carbon trading markets are in their infancy which makes them vulnerable.
And it's happening now. Bloomberg reports that four men have been arrested in France over a 156 million- euro ($230 million) carbon trading fraud involving criminal conspiracy, money laundering, misuse of corporate funds, and carbon trading and tax fraud.
That's been followed up by a statement from Europe's top cops at Europol that there has already been 5 billion euros of carbon fraud, or $US7 billion worth. That's just in the last 18 months. More alarmingly, the cops reckon up to 90% of the whole market volume was caused by fraudulent activities. Furthermore, as the New York Times reports, the only thing the European carbon trading scheme has delivered is windfall profits for the big polluters. It hasn't reduced emissions.
Cap and trade schemes are easy targets for organized crime because they are impossible to manage. They're too unpredictable, they don't conform to standard price analysis for commodities and you can't put a central bank in charge of these because that would create many more problems and, in any case, the expertise and experience isn't there.
It's an issue I looked at in my column here.
With America embracing a cap and trade scheme, and the rest of the world following suit, it's going to create some enormous opportunities for organized crime.
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