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Corruption of Bribery

Chapter 6 : Corruption in the “Carbon World”

13.2 Trading in Carbon Credits
Carbon credits, whether resulting from Kyoto allocations, official offsets (such as CDM or JI) or
voluntary schemes can be used for compliance purposes or traded in the primary or secondary
markets at the discretion of the owner.

Trading systems essentially have three parts

 the registry is the official database of carbon financial instruments owned by account
holders
 the trading platform is a marketplace for executing deals between account holders
 the clearing and settlement platform

Figure 6.19 summarises the structure and interfaces:

Trading
Interface

Registry
Interface
Financial Settlements

CITL
Interface
National Registries
Internal Accounting

Interface
Financial Accounting

Figure 6. 19: Trading Structure
The Commodities and Futures Trading Commission believes that by 2015 carbon could surpass crude oil as the
world's most traded commodity. A representative said "carbon related products are probably the most profitable
part of trading for any of the investment banks right now, because the margins are so good and because it's such
a specialist area that a little bit of knowledge goes a long way"

There are five main problems that emerge from the structure shown in Figure 6.19:

 the multiple points of entry for potential participants with varying standards of due
diligence
 there is no integrated regulatory control and an absence of ownership

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