Isra-Mart srl: EU carbon registries to shut for two weeks over Christmas

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The EU's efforts to bolster the security of its carbon market following a series of scandals earlier this year will result in all national carbon registries being closed for up to two weeks around the turn of the year, as officials prepare to move existing registries over to a new central registry.

The Commission yesterday released a statement confirming that in order to effectively manage the migration of EU emissions trading scheme (ETS) accounts into the new central registry next year, access to national registries will be suspended for up to a fortnight.

It added that the exact dates for the suspension of national registries will be announced no later than October.

Market analysts said they expected the suspension to come into effect following the delivery of December 2011 futures, so that it coincides with the traditionally quiet trading period over Christmas.

"We'd expect it to come after the delivery of the 2011 futures, so there will be no impact on the futures market," Daniel Jefferson of Thomson Reuters Point Carbon told BusinessGreen. "The only impact will be on the spot market, but volumes on the spot market have been very slow since the frauds were uncovered earlier this year."

National carbon registries across Europe were suspended for several months earlier this year, after it was revealed the market had been targeted by cyber criminals who had stolen millions of euros worth of emission allowances.

The fraud prompted a major overhaul of security standards across the various EU registries and led to calls from traders for the EU to accelerate plans to move towards a single central registry for carbon allowances that will keep a record of all transactions.

Speaking to BusinessGreen, Matthew Gray, trading analyst at IDEAcarbon, said the suspension should have little impact on market activity, as long as the dates are communicated in a timely manner and work to prepare for the migration does not overrun.

He added that over-the-counter trading and futures trading was expected to continue as usual, while the timing of the suspension over the holiday period should further limit its impact.

He also predicted that the shift to a central registry should help bolster confidence in the market and address long-standing security concerns.

"Having one registry is a positive move from both a security and a liquidity perspective," he said. "There have been big issues with VAT fraud and criminality, so moving to a more secure system will go a long way towards improving confidence in the market.