Carbon Credit Trading Scams

There is no global regulator for carbon credits, which is what powers carbon credit trading scams.

In essence, carbon credit trading scams began with the Kyoto Protocol.

Kyoto was an effort to reduce global greenhouse gas emissions. To accomplish that, Kyoto set a maximum amount of emissions for each industrialized country that signed the Protocol. The Kyoto euphemism for these caps, or quotas, is Assigned Amount Units (AAUs).  Each AAU equals one metric ton of greenhouse gas or the equivalent thereof. Every installation capable of producing carbon pollution in every industrialized country has a specific AAU. If the facility does not use up its AAUs in any given year it can sell the remainder to other polluters as carbon credits. An industrial plant that fears it may exceed its AAUs can buy extra ones in this manner. It can do that either privately or on the open market.

The ability to buy and sell AAUs forces the operator of each installation to decide what is the most cost-effective way to reduce its total emissions. An operator can either use all its AAUs or sell them. If it sells them, it can earmark the money it earns to purchase industrial equipment that emits fewer pollutants.

How Carbon Credit Trading Scams Work

Carbon credit trading scams usually “cold call” potential investors. In other words, they phone you out of the blue. How do they find you? Your contact details might appear on a list they purchased from a retail source. Another option is to send out bulk emails or junk mail. They can even contract that out to third parties. Of course, they also pick up potential investors by word of mouth or at seminars or exhibitions.

Inevitably, the scammer will claim that, as a result of Kyoto, carbon credits are now the latest hot trend in commodity trading. That being the case, you shouldn’t miss out on the opportunity they offer. The scammer will then probably claim that he is working on behalf of a certain industry umbrella organization committed to fighting pollution. He’ll say he’s selling the AAUs of a number of the organization’s members. Or he’s working on behalf of a manufacturer that needs quick cash to go “green” by modernizing its facilities. For that reason, the manufacturer decided to sell off its excess carbon credits. Either way, you’re in luck because you can pay bargain basement prices and then quickly flip the AAUs to another company that needs them. And you pocket the difference.  

Keep in mind that scammers frequently use other terms instead of AAUs. The most common are carbon credit certificates, voluntary emission reductions and certified emission reductions. Some scammers may invite you to invest directly in a project that generates carbon credits. No matter how they disguise it, they’re all carbon credit trading scams.

How Carbon Credit Trading Scams Spread

The main problem with trading in carbon credits is that there is no universal regulator. This, of course, is what powers carbon credit trading scams. 

However, five legitimate independent exchanges do exist that trade carbon allowances:

  • The European Climate Exchange (owned by Intercontinental Exchange, headquartered in Atlanta and traded on the New York Stock Exchange)
  • NASDAQ OMX Commodities Europe (headquartered in Oslo and owned by Nasdaq, Inc., based in New York)
  • PowerNext (headquartered in Paris and owned by The European Energy Exchange AG)
  • Commodity Exchange Bratislava (a joint stock company registered in Slovakia)
  • The European Energy Exchange (headquartered in Leipzig and owned by Eurex, the largest futures and options market in Europe, which in turn is owned by Deutsche Börse, a joint stock company that also owns the Frankfurt Stock Exchange)

Needless to say, none of these five engages in cold calling. Or scams.

Of course, individual investors who bought into carbon credit trading scams cannot sell or trade their carbon credits. They will eventually discover that they lost the money they thought they invested.

If you think you’ve been the victim of a carbon credit trading scam, contact the fund recovery experts at MyChargeBack