Corporate Europe Observatory

Exposing the power of corporate lobbying in the EU

Letting the market play

  • Dansk
  • Nederlands
  • English
  • Suomi
  • Français
  • Deutsch
  • Ελληνικά
  • Italiano
  • Bokmål
  • Polski
  • Portuguese
  • Română
  • Slovenščina
  • Español
  • Svenska

'Letting the market play - corporate lobbying and the financial regulation of carbon trading' examines the reforms being proposed to regulate carbon trading following a series of frauds, and looks at the role of the corporate lobbies in trying to influence this process.

This report outlines a series of reforms to the regulation of carbon trading in response to fraud and the financial crisis, and financial sector efforts to disrupt them. It shows that:

- The European Commission adopted a deliberately light touch approach to regulating its Emissions Trading System since its launch in 2005. A series of fraud cases made this position untenable.

- The Commission has proposed measures to tighten security, which was previously so lax that it was easier to become a carbon trader than to open a bank account. However, the new rules would also cover-up evidence of fraud and gaming by hiding carbon permit serial numbers. The Commission’s intention is to re-issue stolen permits, opening an additional hole in the scheme’s accounting for emissions.

- The Commission has belatedly identified carbon as a commodity that is susceptible to excessive speculation. Leaked drafts of the Market in Financial Instruments Directive (MiFID), a set of rules governing European financial markets, are set to be extended to include carbon trading.

- New regulations on carbon trading have been consistently opposed by financial services lobbyists. For example, in January 2011, the European Commission halted trading on a key part of the carbon market after the latest in a series of large fraud cases was uncovered. Less than a month later and with the suspension still partly in place, the International Emissions Trading Association (IETA, the main carbon trade lobby group) were privately insisting to Brussels officials that “there might be no need to regulate this market.” This report documents how financial sector lobbying has been driven by a desire to find new opportunities for carbon market speculation by whatever means are necessary.

- Although the lobbyists look to be losing some of these battles, plenty of loopholes remain in the financial regulation of the carbon market. More fundamentally, emissions trading introduces speculation by design and has failed to meet its stated objectives. There is a need to de-financinalise climate policy.

Read the full report here.

Attached files: 
This report outlines a series of reforms to the regulation of carbon trading in response to fraud and the financial crisis, and financial sector efforts to disrupt them. It shows that:- The European Commission adopted a deliberately light touch approach to regulating its Emissions Trading System since its launch in 2005. A series of fraud cases made this position untenable.- The Commission has proposed measures to tighten security, which was previously so lax that it was easier to become a carbon trader than to open a bank account. However, the new rules would also cover-up evidence of fraud and gaming by hiding carbon permit serial numbers. The Commission’s intention is to re-issue stolen permits, opening an additional hole in the scheme’s accounting for emissions.- The Commission has belatedly identified carbon as a commodity that is susceptible to excessive speculation. Leaked drafts of the Market in Financial Instruments Directive (MiFID), a set of rules governing European financial markets, are set to be extended to include carbon trading.- New regulations on carbon trading have been consistently opposed by financial services lobbyists. For example, in January 2011, the European Commission halted trading on a key part of the carbon market after the latest in a series of large fraud cases was uncovered. Less than a month later and with the suspension still partly in place, the International Emissions Trading Association (IETA, the main carbon trade lobby group) were privately insisting to Brussels officials that “there might be no need to regulate this market.” This report documents how financial sector lobbying has been driven by a desire to find new opportunities for carbon market speculation by whatever means are necessary.- Although the lobbyists look to be losing some of these battles, plenty of loopholes remain in the financial regulation of the carbon market. More fundamentally, emissions trading introduces speculation by design and has failed to meet its stated objectives. There is a need to de-financinalise climate policy.Read the full report here.
Partner organisation: 
 
While large energy companies are quick to spend heavily on lavish conferences, they are much less forthcoming when it comes to transparency of their lobby activities. This article looks at some of the most important energy companies lobbying the EU and tracks their disclosures in the EU’s voluntary lobby transparency register in 2013 and 2014.
Corporate Europe Observatory and Friends of the Earth Europe have today written to the Secretary General of the European Commission, Catherine Day, to complain about the industry domination of the European Science and Technology Network on Unconventional Hydrocarbon Extraction.
The first corporate sponsors of this winter's 'historic' UN climate talks (COP21) have been unofficially unveiled: luxury brand Luis Vuitton (LVMH) and Suez Environment, a key member of the French pro-fracking lobby. According to an article by ATTAC's Maxime Combes, others were initially announced in the press (BMW, Vattenfall and New Holland Agriculture) but later denied by the COP21 organisers.
New report by CEO and Friends of the Earth Europe on the European Commission's new advisory network on fracking, which is opening the back door to shale gas expansion across Europe, despite massive public opposition.
Press release

COP21 sponsors are not so climate friendly!

CEO joins NGOs in highlighting concerns that the talks are being captured by big polluters.
While large energy companies are quick to spend heavily on lavish conferences, they are much less forthcoming when it comes to transparency of their lobby activities. This article looks at some of the most important energy companies lobbying the EU and tracks their disclosures in the EU’s voluntary lobby transparency register in 2013 and 2014.
An investigation led by research and campaign group Corporate Europe Observatory (CEO) and journalist Stéphane Horel exposes corporate lobby groups mobilising to stop the EU taking action on hormone (endocrine) disrupting chemicals (EDCs). The report sheds light on how corporations and their lobby groups have used numerous tactics from the corporate lobbying playbook: scaremongering, evidence-discrediting, and delaying tactics as well as the ongoing TTIP negotiations as a leverage.
Group aims to closely follow the developments on Better Regulation and the initiatives and actions from the Commission, Parliament and Member States in this area.

Alternative Trade Mandate

Corporate Europe Forum