Europe's flagship carbon trading scheme suffered a blow today as the Danish government was forced to rush an emergency law through parliament to clamp down on a virulent form of VAT fraud.

On the eve of the Copenhagen climate talks, which will attract world attention to emissions trading schemes, police and tax investigators across Europe are believed to be investigating hundreds of millions of euros worth of fraud involving carbon quotas originating in Denmark.

Since British, French and Dutch governments took similar action in the summer, much of the "carousel" fraud involving carbon credits moved to Denmark, where registration of carbon quotas for the European Emissions Trading Scheme (ETS) is easy and a VAT rate of 25% makes the fraud attractive to international criminals.

Source: The Guardian

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