Australia's emissions trading scheme (ETS) will almost certainly be scammed by unscrupulous business operators, Opposition Leader Tony Abbott says.
As far back as 2007 when carbon permit trading was raised as an idea in Australia, federal police officials expressed concern about
the potential for fraud.
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Mr Abbott told a business forum in Melbourne on Friday the problem of fraud alone had the potential to undermine the ETS being proposed by the federal government, and expected to be unveiled next week.
The scams generally involve a business claiming that it is providing carbon abatement, through tree planting or technology, but in fact is doing nothing but signing a register and taking money from unsuspecting companies.
Linking Australia's ETS to a global carbon permit market is seen as the key to keep abatement costs as low as possible.
Mr Abbott said trading in carbon permits was different to the trade in iron ore or wheat.
"In carbon trading, neither party has any intrinsic interests in the emissions reduction underlying the permit - their only interest
is in checking the required transfer has taken place on a register," Mr Abbott said.
"Such a trading system would require the most intensive third party policing ... (and) without such policing an ETS could offer the appearance of achieving lowest cost abatement without much actual abatement occurring at all."
He said while Australian companies carefully audited their books, "in countries or organisations with less developed and less scrupulous administrative cultures the scope for corruption is obvious".
"This is the fundamental practical problem that will arise with any ETS and one that could outweigh, on its own, the alleged benefits of trading in carbon permits."
He said a "dependable carbon cop" would be needed.
"This is a market based on the non-delivery of an invisible product to no one, and is almost certain to be scammed," Mr Abbott said.
The AFP has been examining the issue since an ETS was first raised as a serious proposal four years ago.
Former AFP chief Mick Keelty told a forum at that time that any carbon trading scheme had the potential to be undermined by "corruption or fraud".
In April 2010, AFP deputy commissioner for national security Peter Drennan said carbon trading "may in time provide opportunities for organised criminal syndicates to exploit new markets and engage in fraudulent activity".
The AFP believes that while an ETS won't create any new "crime types", there is potential for prosecutions for such offences as "obtaining property/financial advantage by deception", forgery, bribery and abuse of public office.
