The European Union's flagship cap-and-trade carbon credit trading system is plagued by massive fraud and is effectively under the control of organized crime, according to a December 9 statement issued by European police. Europol, an EU-wide criminal intelligence agency similar to the U.S. Federal Bureau of Investigation, says bogus trading at the EU's Emission Trading Scheme (ETS) has exceeded €5 billion (U.S.$7 billion) over the past 18 months alone. Europol says that in some EU countries, up to 90 percent of the entire market volume is fraudulent.
News of the scale of the fraud, which comes just weeks after hundreds of hacked emails suggest that scientists have manipulated and exaggerated global warming data, will cast further doubt over the effectiveness of carbon trading as a way to curb emissions. It may also provide fresh ammunition to critics of the Obama administration's plans to implement a cap-and-trade system in the United States that is largely based on the European model.