Microdyne, a firm registered in Cyprus but based in London, confirmed at the weekend that it bought and sold carbon credits earlier sold by the government of Hungary to a mystery trader who then “recycled” them on the European market, turning a quick profit of €2 million, The Sunday Times said in its online edition.
The Hungarian government recently sold 800,000 carbon credits to a trading company called Hungarian Energy Power, which paid €9 each. HEP then immediately transferred them to Microdyne, which in turn sold them to a trading firm in Hong Kong, which sold them via CERs exchange BlueNext to a number of European brokers and banks at about €11.50 to €12 each, generating a quick profit of €2 million, the paper said.
BlueNext suspended trade in spot CERs on Wednesday after it found some permits had been illegally reused. Rival CERs exchange Nordpool also suspended trade as a precaution.
Bloomberg reported on Friday that the Hong Kong-based buyer of the credits was informed about restrictions on the offsets. Microdyne has a contract in which its client acknowledges buying credits that “were already surrendered once” and therefore couldn't be sold or reused in the European Union's cap-and-trade market, according to a letter dated March 18 addressed to József Spenger, a director at Hungarian Energy Power, who supplied a copy to Bloomberg.
It is thought that Hungary sold the CERs on the understanding that the credits would eventually go to Japan, the Times said. While Japan falls outside Europe's pollution reduction scheme, it can still use the credits to meet targets under the UN's climate change framework. They are not supposed to be “recycled” back into Europe. (MTI-ECONEWS)