Following a series of cyber-thefts from several EU Emissions Trading System registries which took place over January 2011, the European Commission outlined on 23 February a series of actions aimed at strengthening the integrity of the European carbon market. These proposals , which were discussed by the EU Climate Change Committee, include a series of short term actions to allow Member State to improve security in their systems, as well as medium and long term measures to increase both with Member States and through a regular dialogue with stakeholders.

On 19 January 2011, after a series of cases of cyber theft from a number of registries, the European Commission decide to suspend transactions in all EU Emissions Trading System (ETS), excepting the allocation and surrender of allowances. After that crisis, the Commission and Member States have been collaborating constructively in order to ensure minimum security requirements for national ETS registries.

As a result, the European Commission has proposed at a meeting of the Climate Change Committee on 23 February a series of short-term measures to be implemented by Member states as well as some legislative actions foreseen for the coming months.

Short-term measures to enhance security in EU Emission Trade System (ETS)

• Regular reviews and updates of registry security plans
• A review and strengthening of policies concerning the opening of registry accounts, building on best practice, and a risk based review of existing registry account holders
• Facilitation of information exchange between Member States regarding suspicious requests to open an account
• Better training for registry users
• Better use of options in existing EU legislation to prevent VAT fraud. Not all Member States have yet eliminated the risk of VAT fraud despite the existence of enabling legislation at EU level to do so

Furthermore, the European Commission will shortly propose a modification of the EU Registry Regulation so as to give a stronger legal basis for measures to protect the integrity of the carbon market and uphold the reputation of the EU ETS . In order to intensify work to make the European carbon market subject to appropriate financial markets legislation, Commission will also bring forward and shortly initiate a public consultation on enhanced carbon market oversight already announced in its Communication on carbon market oversight of 21 December 2010.

The Commission will host a stakeholder meeting on registry security measures and stolen allowances in March, and is also planning to intensify its dialogue with relevant stakeholders on key implementation issues concerning the EU ETS.