Corporate Europe Observatory

Exposing the power of corporate lobbying in the EU

Letting the market play

'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.

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

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: 
 

Corporate Europe Observatory needs to raise €3000 to challenge dirty energy corporations who are trying to hijack the UN climate negotiations this December in Lima (COP 20), building a strong voice to carry through 2015 when governments meet again for the crucial talks in Paris.

As many civil society groups walk back in to the UN climate talks today in Bonn after walking out last November in Warsaw [X], authors of the COP19 Guide to Corporate Lobbying [X], Corporate Europe Observatory, warn that unless we end the cosy relationship between political leaders and the dirty

Concerted lobbying from Europe’s dirtiest industries has resulted in the gutting of EU climate and energy proposals, it has emerged today.

They meet at birthday parties, over breakfast meetings, during cocktail receptions; so just how close are Europe’s dirtiest industries to senior politicians and regulators? And what influence is this lobbying having on the EU’s official climate change policy? These are the kind of questions we need to be asking as leaders from the 28 EU member states try to reach agreement on Europe’s climate targets for 2030. This scrutiny is particularly urgent because – as this privileged access might imply – these industries appear to have been extremely successful at watering down EU climate and energy legislation. Read the new briefing by CEO and Friends of the Earth Europe.
Corporate Europe Observatory needs to raise €3000 to challenge dirty energy corporations who are trying to hijack the UN climate negotiations this December in Lima (COP 20), building a strong voice to carry through 2015 when governments meet again for the crucial talks in Paris.
An analysis of the revised independence policy of the European Food Safety Authority (EFSA). More reworded than revised, actually.
The EU's Comprehensive Economic and Trade Agreement (CETA) with Canada could unleash a wave of corporate lawsuits against Canada, the EU and its member states – including through the Canadian subsidiaries of US multinational corporations. This is the result of an in-depth analysis of CETA’s investor rights by Corporate Europe Observatory and 14 other environmental NGOs, citizens’ groups and workers unions from both sides of the Atlantic published today.
The position of Chief Scientific Adviser to the President of the European Commission has been discontinued, and the Juncker Commission says it is now reflecting on how to organise independent scientific advice. This is a crucial issue and, together with many other NGOs, we sent a list of principles to the Commission on how to, in our opinion, try to best do this.

Corporate Europe Forum