Isra-Mart srl:Could EU carbon registries stay closed for months?

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Concerns are mounting that a handful of EU carbon registries could stay closed until March or April after the European Commission last week ordered a shut down of all registries in the wake of a cyber attack that saw an estimated £28m of carbon credits stolen.

The Commission announced on 19 January that it would close all member state's carbon registries in response to the fraud, halting spot trading in the EU emissions trading scheme (ETS). It said in a statement that the registries would shut for all activities, bar allocating and surrendering allowances until at least 26 January.

But speaking at a European Parliament hearing yesterday, Jos Delbeke, director-general of the European Commission's climate change office, said fewer than half the registries would re-open tomorrow.

"I do not expect that, as of this Wednesday, all 27 authorities will be fit enough to resume again," Jos Delbeke told a European Parliament hearing. "I do not expect a figure that is beyond half of the member states."

The bulk of registries in western Europe, many of which invested in beefing up their cyber security last year, are expected to re-open tomorrow or Thursday.

But speculation is mounting that many of the registries in the EU-15 block of Eastern European states could stay shut for several more weeks.

"The Commission is taking a very strong line and saying they are going to test all the registries before they can open up again," said Alessandro Vitelli of analyst firm IDEAcarbon. "The good guys will be able to open up pretty swiftly, but when you get into the EU-15 we could be waiting quite a while for them - the worst offenders could be down until March or April."

Kjersti Ulset, head of European carbon analysis at Point Carbon, said it was unlikely the registries would remain closed for months, but she admitted there was no indication when some of them would open.

"It should be possible to [improve the security of the registries] fairly quickly, but we just don't know when they will be ready," she said. "It depends on the individual countries and how much focus they are willing to give to this work."

Lengthy delays are likely to further anger carbon traders already furious at last week's botched announcement of changes to the EU rules governing industrial gas credits.

Vitelli said that growing numbers of traders and investors were likely to demand compensation from the EU for any stolen credits and the disruption caused by the closure of the registries.

"At this time of year people are totting up how many allowances they have and may be looking to sell the excess on the spot market," he explained. "If they are frustrated in their efforts to monetise any surplus allowances... then there will be talk of compensation."