EU ETS Fraud Suspicion For $79M Leads To Raids In Bulgaria

EU ETS Fraud Suspicion For $79M Leads To Raids In Bulgaria - Carbon Herald
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The European Public Prosecutor’s Office (EPPO) in Sofia, Bulgaria carried out multiple investigative actions in 11 cities in relation to possible fraud regarding the EU Emissions Trading System (EU ETS). The losses for the EU and Bulgarian budgets from the fraudulent activities are estimated to be approximately $79 million (75 million euro) over a period of five years.

The main focus of the raids is a private company that carries out the verification of greenhouse gas emissions of thermal power plants and heating plants in Bulgaria. Reports from the company are suspected to contain falsified data and under-declaring emission outputs under the EU ETS.

This is suspected to have started in 2017 and relates to plants that are owned indirectly by Hristo Kovachki, one of the most prominent businessmen in the country’s energy sector. Five of the country’s coal power plants and a number of other energy facilities are considered his ownership under different forms.

It’s estimated that the under-declared emissions submitted to the national authorities resulted in losses to the EU and national budgets of tens of millions of euro, in amounts that would otherwise have been paid by the power plants.

Relevant: EU Carbon Price At All-Time High, Trading Over 100 euros/tonne

Over 150 police officers took part in 40 searches in 11 cities, with 70 witnesses interviewed. Relevant mobile devices, computers and documents have been seized and will be examined by the EPPO.

The EU ETS is a key component of the EU’s efforts to curb carbon emissions and is the first large-scale carbon market after it was established in 2005. The investigation of the alleged abuse of the EU ETS in Bulgaria allegations highlights some of the vulnerabilities the mechanism has and will hopefully lead to improved control and transparency.

Read more: EU Parliament Accepts Emissions Trading Changes, Keeps Old Targets

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