Carbon Credit Trading Scams

There is no global regulator for carbon credits, which is what attracts scammers.

The objective of the Kyoto Protocol is a worldwide reduction in greenhouse gas emissions. To accomplish that, the amount of emissions the industrialized countries of the northern hemisphere produce was capped by quotas.  These quotas are known as Assigned Amount Units (AAUs).  Each AAU equals one metric ton of greenhouse gas or the equivalent thereof. Each industrialized country that is a signatory to the treaty has to assign AAUs for each installation capable of producing carbon pollution within its own borders. 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.

By permitting AAUs to be bought and sold, the operator of each installation can 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 scammers 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’s selling AAUs assigned to 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 besides AAUs. The most common are carbon credit certificates, voluntary emission reductions and certified emission reductions.  Other scammers may invite you to invest directly in a project that generates carbon credits. No matter how they disguise it, it’s all the same scam.

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 attracts scammers. 

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.

Individual investors who bought from scammers inevitably report that they cannot sell or trade their carbon credits. They simply lost the money that 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