The credits were stolen this week from registries across the European Union, prompting the European Commission to suspend trading, news Web site EurActiv reports. Each carbon credit, which can offset 1 ton of emitted carbon dioxide, is worth $19. Allowances were reportedly stolen in the Czech Republic, Greece, Estonia, Poland and Austria and sold on spot markets.
"We haven't had a figure like 2 million allowances being stolen before," Maria Kokkonen, spokeswoman for EU Climate Commissioner Connie Hedegaard, told EurActiv. "It is the biggest."
The ETS is the world's largest carbon market. It generated sales of around $122 billion in 2010, with most allowances traded in future markets. Brussels urged member states to improve security of trading platforms after a series of frauds last year. Citing a lack of money, several governments didn't implement changes.
"We have continuously urged member states to enhance their security measures," Kokkonen told EurActiv. "It is in their interests to protect their companies. We have 14 member states whose registries are not upgraded when it comes to security measures."
Markets are expected to remain closed until security is improved.
"The sooner they increase the security measures, the sooner we can reopen the systems," Kokkonen added.
By putting a price on carbon dioxide, the ETS is to reduce companies' emissions and protect the environment from global warming. The EU has set itself targets of reducing greenhouse gas emissions by 20 percent by 2020 compared with 1990 levels.
Firms received emission permits for free under the first phase of the scheme from 2005 to 2007. The EU wants energy companies buy all their permits from 2013 onward.
Firms are required to hold a number of allowances equivalent to their emissions. The total number of permits in the market cannot exceed a previously set total emissions cap, limiting total emissions to that level.
Stig Schjolset, a senior market analyst at Point Carbon, said the suspension of trade has damaged the ETS.
"It is definitely very bad for market confidence," he told EurActiv. "It is also very bad for the reputation of the carbon market because it adds to other similar incidents we've had over the last couple of years."