Isra-Mart srl:Barker urges Hedegaard to beef up carbon registry security

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British Climate Change Minister Greg Barker has written to EU Climate Commissioner Connie Hedegaard calling for carbon registries to be given the same security standards as bank accounts, following the high-profile theft of £28m of carbon allowances in a cyber attack last month.

In a letter on Tuesday, Barker urged Hedegaard to implement the highest possible security measures in line with UK standards for all 27 member states' carbon registries.

"The registries are in many ways akin to bank accounts and we believe that similar security features should be standard across EU registries," he said. "These include universal adoption of 'two-factor authentification' where access to the registry needs more than just a password, but also an additional confirmation of identity similar to the card readers increasingly used by banks.

"Likewise we would like to see more regular and frequent testing of the vulnerabilities of registries and updating of the software used to protect these registries."

Trevor Sikorski, director of carbon markets research at Barclays Capital, welcomed the move, but warned a boost to security measures would not necessarily protect registries from the wider risks of money laundering and carbon fraud.

"It's all good stuff but there are some bigger problems that we think need to be addressed," he said.

The UK was in the first tranche of countries allowed to reopen its national registry after the EU approved an independent report confirming that every company holding allowances on its database had an adequate level of protection.

The EU Comission banned all spot trading of carbon allowances in mid-January after Czech firm Blackstone Global Ventures said 475,000 emissions allowances had been stolen from its national registry.

The fraud, estimated to be worth £28m, sparked criticism from carbon traders who accused a number of member states of operating registries that failed to meet adequate cyber security standards, particularly in eastern European states.

The commission subsequently called on all member states to file independent reports proving their registry meets "minimum security standards" before they could re-open.

Yesterday, Spain became the seventh country sanctioned to reactivate its registry as the EU said it expects to receive further security reports in the coming days. However, concerns remain amongst traders that some registries could remain closed until March or April.