POLITICS

Green energy and organized crime: A match made in heaven

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Politics,Beltway Confidential,Conn Carroll

The Washington Post has a front page story today reporting on how the Mafia came to dominate Italy’s renewable energy sector:

The still-emerging links of the mafia to the once-booming wind and solar sector here are raising fresh questions about the use of government subsidies to fuel a shift toward cleaner energies, with critics claiming huge state incentives created excessive profits for companies and a market bubble ripe for fraud. China-based Suntech, the world’s largest solar panel maker, last month said it would need to restate more than two years of financial results because of allegedly fake capital put up to finance new plants in Italy. The discoveries here also follow so-called “eco-corruption” cases in Spain, where a number of companies stand accused of illegally tapping state aid.

Because it receives more sun and wind than any other part of Italy, Sicily became one of Europe’s most obvious hotbeds for renewable energies over the past decade. As the Italian government began offering billions of euros annually in subsidies for wind and solar development, the potential profitability of such projects also soared — a fact that did not go unnoticed by Sicily’s infamous crime families.

Roughly a third of the island’s 30 wind farms — along with several solar power plants — have been seized by authorities. Officials have frozen more than $2 billion in assets and arrested a dozen alleged crime bosses; corrupt local councilors and mafia-linked entrepreneurs. Italian prosecutors are now investigating suspected mafia involvement in renewable energy projects from Sardinia to Apulia.

This is actually a very old story. Back in 2009, the Financial Times reported:

Anti-Mafia magistrates in Sicily have opened a sweeping investigation into the wind power sector where local officials, entrepreneurs and crime gangs are suspected of collusion in the construction of lucrative wind farms before their eventual sale to multinational companies.

Italian and EU subsidies for the building of wind farms and the world’s highest guaranteed rates, ($240 per kwh), for the electricity they produce have turned southern Italy into a highly attractive market exploited by organized crime.

Italy and China are not the only countries whose green energy programs have encouraged massive fraud. Reuters reported in 2009:

The British tax office arrested seven people in London on Wednesday in a suspected 38 million pounds ($62.6 million) value-added tax fraud in the European market in carbon allowances, it said. … “Those arrested are believed to be part of an organized crime group operating a network of companies trading large volumes of high-value carbon credits,” it said.

Why are green energy programs so susceptible to organized crime? New Zealand Climate Science Coalition economic panel chairman Bryan Leyland explains:

So, to my knowledge, carbon trading is the only commodity trading where it is impossible to establish with reasonable accuracy how much is being bought and sold, where the commodity that is traded is invisible and can perform no useful purpose for the purchaser, and where both parties benefit if the quantities traded have been exaggerated. … It is, therefore, an open invitation to fraud and that is exactly what is happening all over the world.

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