Huge Phishing Attack On Emissions Trade In Europe

bratgitarre writes "A targeted phishing scam on companies trading with greenhouse gas emission certificates in Europe has reaped millions, Der Spiegel reports. By sending phishing e-mails to companies in Australia and New Zealand purporting to be from the German Ministry for Environmental Protection (German article, Google translation) the criminals obtained login credentials for companies owning polluting permissions. They then swiftly sold them to other polluters in various European countries. Damages are probably huge for a single incident, as 'one medium-sized German company alone had lost allowances worth €1.5 million ($2.1 million).' German federal officials, who can trace some of the transactions, claim that out of 2000 certificate sellers, seven responded to the scam."

Comments

What did they learn?

[T Murphy]

Is there any reason it would be a bad idea, if someone has control over millions in assets, two people's login credentials should be required to confirm a transaction? It's bad enough to have someone responsible for that much money be foolish enough to fall for a phishing scam, but I should hope there is a low chance two people could run a company successfully but both fall for the same scam.

Re:What did they learn?

[DaveGod]

No, and any company should be doing just that. The company's auditors should be detecting if it's not required, and reporting such weakness to management. Failing to implement such basic controls will cost the company, whether or not there is fraud. The auditor will face much greater audit risk and hence have to increase his workload (and hence fee) to compensate.

On the other hand, such a control probably would not be very effective against this. For example Person A gets tricked and then gets Person B who probably does not go through the detailed mechanics - if anything he'd go check out the official website and approve it on that basis.

A more relevant control would be authorised supplier lists combined with set procedures. For example, a company would only allow emissions trading through a specific broker and the payments would always be made to that broker's escrow account. That way you can get fiddled and all you get is a call from your broker wondering why they have your money.

For what it's worth transactions were a lot better controlled when everything was paid by cheque. Cheques required two signatories. Banks were very good at ensuring authorised signatories were authorised. Now for smaller businesses with internet banking you have a bookkeeper who needs access to print statements and the same login can complete transactions from start to finish - half the time they're using the managing director's login. Well, you can't have the MD's time being used up doing silly things like printing statements can you? And bookkeepers, it's not like they're in a high-risk position and able to hide fraud....

And that is why evil will always win

[Chris Burke]

Because good is dumb.

Re:And that is why evil will always win

[Chris Burke]

No, my family name is awesome.

Carbon allowance trading is a big scam

[Anonymous Coward]

Just what we need, another derivative in the energy markets for traders to salivate over ala Enron.
That's why the so called cap and trade is advocated by the sausage-makers. It is a big giveaway to the Goldman Sachs crowd.

And Al gore stands to make hundreds of millions if the trading scheme goes into practice.

Even a global warming partisan activist like James Hansen )NASA) calls this a scam, and favors a simpler "carbon tax"
-Jay

Re:Carbon allowance trading is a big scam

[Jeremy Erwin]

The cap and trade model theoretically allows a cap to be achieved as efficiently as possible. Some plants will emit less because they will have already switched to less emittive technologies. Some other plants have not. The extra fees allow the cost of using a greenhouse emitting technology to be properly reflected on the books.

Re:Carbon allowance trading is a big scam

[Demonantis]

Could the public interest in the environment be used or emission regulations with penalties. It is just a created commodity. It will motivate people to reduce in the beginning, but not overall and with reduced returns as more companies upgrade so they can sell their artificial commodity instead of buying it depressing the value of upgrading. The only real benefit is that it motivates instead of forcing companies to adopt better policy. A carbon tax is a much better idea as it can be adjusted by the government and be used to fund green R&D while motivating companies to upgrade their facilities.

Re:Carbon allowance trading is a big scam

[maxume]

Which economists? All of them?

Did they model China and India as a free for all (a tax can be applied to imports, and perhaps, rebated against exports)?

As far as the tax receipts, it wouldn't be that hard to find something to do with the money (pay off debt is an easy one), the only hard part would be agreeing on where to spend it (and that's only a problem because our politics are ridiculous).

Re:Carbon allowance trading is a big scam

[zblack_eagle]

What to do with the tax money? Subsidize R&D for renewable energy, subsidize renewable energy generation and fund more substantial public transport systems that actually have a hope of competing with cars. Yeah, I know that in practice this likely won't happen because governments like to lump all tax revenue into one huge pile. But in the same vein, cap and trade isn't going to work because governments insist on throwing free rights to their heavily polluting lobbyists

Re:Carbon allowance trading is a big scam

[Rei]

I'm kind of fond of a concept I haven't seen much mentioned -- CAT (Carbon-Added Tax). It's like VAT, but for carbon. The way VAT works is that at each step of the chain where value is added to a product, it is taxed based on the value added. Imports and exports are taxed based on their full value -- unless they've already paid VAT, wherein they're exempt).

CAT would work the same way. At each step of the way where the product gains embodied carbon (that is, either carbon that's emitted in the process of making it or ends up in the product in such a way that it will be directly emitted when the product is used), it's charged CAT.

The benefit of this to cap & trade is that it addresses the common question of, "What if India and China don't join us?" Well, then all of their goods get taxed CAT at the port. Since Europe would almost certainly join a CAT agreement if that was the standard, agreed-upon way to fight climate change, their goods -- having already paid CAT -- would not be taxed CAT upon import.

Ideally, the program would be structured as a "feebate", with all CAT tax revenue being compensated for by, say, cutting payroll taxes.

Really, though, you don't need any sort of carbon tax or cap to fight climate change in the biggest ways. Even charging for the other externalities would be enough. For example, the average coal power plant in the US causes about 3 1/2 cents/kWh worth of direct health-related damages to the economy, and the worst ones cause over 12 cents. This is from particulate matter, NOx, SOx, etc. The production tax credit for wind is only 2.1 cents/kWh. So if coal merely had to pay for its health costs, it'd rapidly disappear from our grid (primarily replaced by wind, natural gas, and possibly nuclear). Such a tax on health externalities would again be best structured as a feebate -- this time, as a subsidy for healthcare, weighted by county on a revenue-proportional basis (i.e., place with dirty power = pays the most tax = gets the most subsidy). You'd want to phase it in over 10 years so that there's time for the generation mix to adapt, of course.

Re:Carbon allowance trading is a big scam

[Rei]

Public transportation is only a partial solution. It's great at dealing with the high-density legs. It sucks at reaching specific endpoints. In areas where population traffic is very dense, it can be a 100% solution. Elsewhere... not so much.

Out here in your average town of 60k people, with one of the best public transportation systems in the region, it just doesn't work well. To catch a bus from my home, I have to walk about five blocks. In Iowa (think of our winters). When I go to work and come home, they only show up hourly -- if I miss it, I'm in *big* trouble. The bus averages about 8 passengers onboard. It meanders all over the place to pick up and drop off passengers, increasing the length of the route and adding way more stops and starts and idling, reducing efficiency. The bus probably averages about 3 1/2 mpg diesel in the sort of drivecycle they put it through -- which is the CO2 equivalent of about 3mpg gasoline. 8 passengers, that's 24mpg equivalent if each person drove by themself... but you have to go perhaps 50% more miles you reach your actual destination, so it's really more like 16mpg. So if everyone drove by themself in an SUV, that'd be about the equivalent.

And it takes 4 times as long for me to get to my destination (I have to do one transfer).

What's the solution?

  * More frequent bus trips -- but even fewer passengers per trip, and thus even worse per-passenger mpg?
  * Less frequent bus trips -- *2 hours* between stops? Yeah, that'll up your ridership...

Really... it just doesn't work effectively. And I say this as someone who generally enjoys subway and rail travel. On high-density legs, public transit works well (and that's what subways and rail are typically used for). Public transit is great for downtown areas and high residential density areas (apartments, etc). But in other places... no.

Re:Carbon allowance trading is a big scam

[slinches]

Economists have modeled cap and trade versus the other alternatives (in a game theoretic sense) and the results are pretty much clear. Within the framework of a free market, there is no more efficient way of forcing companies to internalize their externalities.

Great. We have an optimal method of internalizing the CO2 externality. Now what is the impact of CO2 output in $$/kg so we can put this method into practice?

The problem I have with cap and trade is not that the method being used is inefficient, but that the value of the carbon credits is being set based on political motives. Rushing into cap and trade without an accurate carbon credit value estimate could end up costing far more than the effects of uncontrolled CO2 emissions. At this point, can we even be sure that increased CO2 output will cause a net loss of overall wealth?

Is it only me

[thewils]

or does anyone else think that the whole idea of trading emission allowances is a huge scam to begin with?

Re:Is it only me

[maxume]

It really isn't obvious that CO2 reduction and capture is anywhere as easy as sulfur reduction apparently was.

(it is arguable that the sulfur reductions simply demonstrated that the producers could easily bear increased regulatory requirements, there wasn't really any sort of active market)

Re:Is it only me

[vxice]

Well at first yes, but isn't it a much bigger scam that people get to pollute, obviously they gain other wise they would have to pay to remove their waste pollution is free, rather than pay market value for access to the waste disposal they would use? You would complain about a company dumping waste on your lawn wouldn't you? If not then companies would dump everything they could, massively dropping their waste disposal costs. Unfortunately atmosphere is not easy to control access to, this is basically the classic example of a market failure and one of the few times economists advocate government stepping in and regulating industry by charging them for access to a resource they use but don't pay for. As long as it is free and there are no limits on what they can put in the atmosphere they will put everything they can to lower costs.

Re:Is it only me

[Arthur Grumbine]

It was such a complete failure that acid rain is no longer a looming problem... oh, wait.

Why do I feel this will be the exact same justification for the next environmental crusade after "looming AGW" fails to destroy the mankind?

Re:Is it only me

[Alinabi]

It's mostly you. Every other commodity in this world is traded, including your odds of getting sick or having a car accident, so why not this one?

Re:Is it only me

[maxume]

You are ranting about free markets. Cap and trade is the government using a market to help put a value on regulatory certificates. It is a market.

Re:Is it only me

[sien]

The US cap and trade on sulphur dioxide emissions was passed in 1990.

Overall, the Program's cap and trade program has been successful in achieving its goals. Since the 1990s, SO2 emissions have dropped 40%, and according to the Pacific Research Institute, acid rain levels have dropped 65% since 1976.[15][16] However, this was significantly less successful than conventional regulation in the European Union, which saw a decrease of over 70% in SO2 emissions during the same time period.[17]

S02 emissions were also falling from a peak in the late 1970s toward the 1990s, in other words the US S02 trading scheme was on an already declining path and was less successful than more direct European approaches.

S02 emissions trading was also local and not between countries which is another area where the proposed Green House Gas emissions trading schemes fall down. A corrupt county can just 'create' permits and then sell them. This has already happened with European and other schemes.

A tax would be a much more honest, much more transparent scheme than an Emissions Trading Scheme (ETS). ETS type solutions are attractive largely because politicians don't have to say they are a new tax, they can be easily gamed by giving out free permits and Enron style firms (including Enron itself before it went bankrupt) see a potential bonanza.

Re:Is it only me

[TapeCutter]

"The introduction of artificial scarcity by a non-market entity (government) does not make something a market solution."

How is that rhetorical bullshit informative? There is nothing artificial about the biosphere's capacity to absorb our wastes. Ignoring those limits implies humanity is no smarter than jar of fermenting yeast.

And where do you get the idea that government is a "non-market entity"? - Not only are they usually the largest customers but they make the rules, the rules - ARE - the market.

In Receipt of Stolen Goods

[mdsolar]

I can't see how the companies that bought the stolen property can retain it. It has to be returned to the owners. Hopefully, insurance will cover it.

It only feels that way...

[Oxford_Comma_Lover]

The goal is to reduce emissions. At least in theory, a market-based system for doing that, with a hard number of credits available, should succeed in limiting (or reducing) emissions. (Provided that you don't abolish other current regulation limiting emission in any given area.) Allowing people to buy and sell credits then rewards companies that are efficient (because they can sell credits) and penalizes companies that are inefficient (because they need to buy more credits.)

overphishing

[colonelquesadilla]

The latest environmental threat: overphishing