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The recycled CER cabaretPublished: 1 of June, 2010

Hungary immediately became the maverick of international emission markets when in the middle of March she played a bold trick on the market. The Government of Hungary brought to the market emissions credits which had previously been surrendered by installations in Hungary in order to cover their emissions. These credits have therefore fulfilled their task, thus they should have been cancelled. But the Government of Hungary found a way to make these already used credits valid once again. The scheme worked, and the Japanese Government was willing to buy the emission credits. The international scandal popped only when some of these credits returned to the EU market as a result of subsequent transactions. Since this is explicitly banned by the EU Emissions Trading System (ETS), when the credits were sold, the Hungarian Government also stipulated that the recycled emission credits cannot return to the EU. Once this happened nonetheless, the largest European emission exchanges kept suspending their operations. In order to understand what exactly happened and why, first we need to acquaint ourselves with some of the basic relations.