in Australia, European Union, Peru

Carbon trading is “A con man’s dream”

Carbon cowboys. VAT carousel fraud. Double-counting. Hackers. A fake bomb scare in the Czech Republic’s carbon registry. Phishing via fake carbon registry websites. Invented carbon credits. Overvalued carbon credits. Boiler rooms. Imaginary baselines. Auditors with conflicts of interest.

The list of scams in carbon markets is long and the cost in Europe alone is in the order of €15 billion. In an excellent recent article for The Atlantic, journalist Ryan Jacobs highlights fraud in the forest carbon markets. Towards the end of the article, Jacobs notes that,

There is something especially insidious about these fake forest carbon credits. Investors and corporations who buy voluntary credits believe they are buying into something grander than, say, the efficiency improvements of a single factory in China. They believe they’re funding not only the preservation of trees, but also the wellbeing of local forest communities. Unwittingly, they might be financing the destruction of both.

You can read the article here: “The Forest Mafia: How Scammers Steal Millions Through Carbon Markets”.

The article starts with the arrival of balding Australian, David Nilsson, in Peru. Nilsson turned out to be a carbon cowboy, looking to exploit the indigenous Matses people and their forests. Stephen Rice and Liam Bartlett, investigative journalists with 60 Minutes Australia, exposed Nilsson’s plans to cash in on the carbon and then to log the forests and export the timber to China.

Nilsson refused to speak to The Atlantic.

Jacobs interviewed Davyth Stewart from Interpol’s environmental crime unit. A recent report from Interpol describes the risks and the types of financial fraud in the carbon markets. Stewart points out that,

“The experience we’ve had with Europe was that it was often the case of chasing their tail. You know, constantly on the backfoot, and having to plug holes that were being exploited. By the time they get around to discovering the fraud, a number of billions of dollars have already gone missing.”

Jacobs sums up the problem: “The product is invisible, poorly understood, and regulation is extremely limited.” Stewart explains that carbon markets are not like other markets in that there is no concrete commodity to point to:

“It’s not like a bag of rice or other commodities that can, at some point, be easily verified. Here, you’ll have projects that are operating in very remote parts of the world, difficult to access. It becomes very difficult even for an independent auditor who goes, who can make it all the way out to that remote village or that remote town to verify that the project exists — and that they’re doing what they say they’re doing.”

Tom Bewick of the Rainforest Foundation US describes forest carbon credits as “an abstract commodity of nothing happening”.

In remote areas of forest, maps of the land are often poorly labelled or inaccurate. Boundaries may be unclear or in dispute. The same plot of land may have been awarded as a plantation concessions, and as a mining concession – to different companies.

Jacobs points out that the emissions baseline, the rate of forest destruction in the absence of the project, is “imaginary” and “easy to game”:

While this might be easier to prove on a factory retrofit, by, for example, using an emissions device to measure how much carbon dioxide is released before modifications, determining how nature and markets will act on a forest in the future is a guessing game subject to significant corruption.

The problems with forest carbon credits don’t end there. Just because a carbon trading project is established in a remote area of forest does not mean that the threats to the forest necessarily go away. Stewart points out that,

“When you retrofit out a factory or you change the smokestacks and you change the machinery and you double-glaze the windows, you know that there’s going to be long-lasting benefits. Whereas with forests, they’re constantly under pressure for being cleared and for being logged. So the level of oversight is currently inadequate, I think, and not only does it need to be improved, it needs to be … sustainable and long-term.”

The title of this post comes from William Magrath, a natural resource economist at the World Bank. During a meeting he took part in with Interpol officials a few years ago, he told Jacobs, one man called carbon “a con man’s dream”. Indeed, Interpol’s Peter Younger has been warning about fraud and carbon trading for several years. In 2009, he predicted that, “There will be fraudulent trading of carbon credits.” Unfortunately, it seems that no one pushing carbon markets was listening – including the World Bank, where Bank staff still talk about carbon as “the currency of the 21st century”.

Leave a Reply


  1. Thanks for this info. Are we ever likely to get any money back on our so called investment and if not is there anyway the fraudsters can be brought to justice?

  2. @Anne Reid – If you’ve not already done so, here’s what you can do if you’ve been sold carbon credits as an investment at an inflated price:

    1. Contact Action Fraud: 0300 123 2040 or via the website.

    2. Contact the Financial Conduct Authority: 0800 111 6768 or via the website.

    3. Tell your MP that you believe you are the victim of a fraud. Ask her or him what they are doing to regulate the sale of carbon credits and what they are doing to stop the fraudulent selling of carbon credits.

    4. Contact your bank. Also contact the bank to which the money was transferred. Tell them you believe you are the victim of a fraud. Ask them whether they will submit a Suspicious Activity Report to the National Crime Agency.

  3. So…Do you then support a carbon “tax” as an alternative… If so is a tax any less subject to fraud and abuse?
    Consider that a tax goes to a “government” to administer.

  4. @Ric – No I don’t support a carbon tax as an “alternative”. And yes, of course tax is subject to fraud and abuse – the “tax gap” in the UK is currently around £35 billion. Companies are doing a great job of avoiding taxes – the government is often complicit in this avoidance.

    Kevin Anderson, Professor of Energy and Climate Change at the Tyndall Centre, reckons rich countries need to reduce their emissions by 10% a year “starting now and preferably yesterday”. I agree with Anderson that putting a price on carbon isn’t going to meet the 2°C target (which in any case is too high).

  5. Hi there,
    During the last two years my husband, unknown to me, has been scammed out of nearly £20,000.
    Last week He was approached by ISP Securities AG ( who said they could take on and sell these carbon credits. Trusting noone I have told him to ignore future calls which I know he will do so. However, has anyone else out there in this very wicked world come across this organisation.

  6. @Pat Brand – I’m sorry to hear about that. Here’s a list of things you can do if you’ve been sold carbon credits as investments.

    Something you shouldn’t do is trust anyone who rings you up, or sends you an email, telling you that they can sell these carbon credits for you. Once you’ve been conned, you will be contacted by other companies who are either working together with the first company that sold you credits, or who bought your contact details.

    Here’s an example of the type of sales pitch these companies make – this particular one is from a company called Enviro Associates (on a blog post on the Financial Times website FT Aplhaville Paul Murphy called it “scumbag correspondence”):

    Good afternoon,

    We hope this email finds you well. It has been brought to our attention that you have been approached by a number of sales companies in the past regarding the purchasing of carbon credits. For example, some of the particular companies in question are: Capital Asset Partnership, Worldwide Commodities, MH Carbon Limited as well as many others.

    If you have made a purchase of carbon credits through a sales company and would like to receive some of the latest information regarding the market, then please email or call me on my direct number: 01962-353170.

    Please note that we pay approximately £6-7000 a year in Thomson Reuter subscription to gain the latest research that is not publically accessible. This is so that we remain accurate in all of the information that we provide over phone. It also means that we are able to provide samples of our statistical data that is provided to us from Thomson Reuters directly that is not publically accessible without paying the fees as listed above.

    We look forward to offering you support,

    This comment following another post on REDD-Monitor is also relevant:

    I am sorry to say that the probability of anyone selling on VERs they have been sold by boiler rooms is zero.

    I have spoken to two genuine project developers this week, who are holding millions of tonnes of VERs that are superior in quality to those I have seen sold by boiler rooms. These genuine primary sellers have been looking for buyers for over a year. These guys would be overjoyed to sell the lot at anything close to €0.30 per tonne.

    There is a massive oversupply of VERs relative to any voluntary demand particularly for the low cost if not worthless VERs sold by boiler rooms.
    There is no demand in the primary market and there is NO genuine secondary market for this reason.

    So, it doesn’t really matter whether anyone has come across ISP Securities AG. The fact that they contacted you out of the blue tells you all you need to know. As Richard Smith pointed out in this comment, “An anonymous favourable testimonial from someone on the Internet tells you nothing new”.

  7. @Pat Brand – Having spent a few minutes looking up ISP Securities AG, I think it’s safe to say you should also inform Action Fraud about them. But make sure you tell them about the right company…

    There is another company, based in Zurich called ISP Securities AG, part of the ISP Group. Their address is So the company that contacted you is probably a clone.

    Here’s a screenshot of the dodgy looking ISP Securities AG’s website:

    Another company calling itself Borsen Moore, supposedly based in the UK, but not registered at Companies House, has an almost identical website:

    Yet another company, called Leonard Ullrich Neumann, also had a very similar looking website, (but it now seems to have disappeared):

    In June 2013, the Financial Conduct Authority warned that this company is a clone of a previously FCA EEA Authorised Firm.

  8. So how does the “selling on” scam work? I have just been contacted by Carbon Offset Consultants of Tokyo Japan offering to sell my credits for me.

  9. Is there any website where are published SCAM comapnies?
    I was contacted by “friend” to join the CARBON program.
    I am allready registered and I would like to find if the company is SCAM or not.

    Thank you.

  10. @Mini – If the company is selling carbon credits as an investment the chances are extremely high that it is a scam. The Financial Conduct Authority in the UK put out a warning about carbon credits in which it states, “you should avoid investing in carbon credits” and explains “how to protect yourself from what is most likely a scam”.

    Just out of curiosity, what’s the name of the company?

  11. @Jeff – No reputable company would contact you out of the blue. The Recovery Room scam involves getting you to pay a fee upfront in order to sell your carbon credits. It doesn’t make any difference why the company says it needs the fee upfront. If you hand over the cash you are extremely unlikely to see it again. In any case, the company will not be able to sell your carbon credits because they are near worthless.

  12. Hi, I too have been contact by Carbon Offset Consultants in Tokyo Japan and they have asked a fee up front for registering my VERs on the Tianjin climate Exchange. This is all handled by a Holdings company in Hong Kong. I know my VERs are registered on ACR but that does not give me much hope of ridding them. I was conned by the boiler room folks a couple of years ago. i was hoping someone would take the credits off my hands but it is looking ever more unlikely.

  13. Hi Chris Lang,
    I tryed to find out something more about company and it looks good (no SCAM). I am going to visit some seminary about it on Friday.

    Which company?
    This company:

  14. Min – Well, it looks like a pyramid scheme and it’s run by a chap called Erminio Kotlar, who has form in, um, pyramid schemes.

    See for his pedigree.

    “Selskapet kollapset høsten 2004, og anslagsvis 30 000 medlemmer tapte totalt 135 millioner.”

    Shove that through Google Translate and see if you like it.

    I’d give it a miss if I were you.

  15. I will investigate a little bit more.

    I like Idea of business, but Erminio Kotlar afraid me although Mr Kotlar was unarrested.

    But interesting is that the president of Lyoness left the Lyoness business and started doing this thing.

  16. There are thousands of people with VERs out there that must be worth something to someone. I understand from the previous posts that even those companies which holds millions of tonnes of better quality VERs cannot shift them but the piece I do not understand is how the quality of them are measured. Without some form of oversight body or authorisation or certification programme I agree it will be impossible to sell those VERs that have come from boiler room scams. Maybe I am naive but perhaps there are some approaches that can be taken to sell all VERs, some kind of grading system with those with the highest quality receiving the most money and proportionally diluted as the quality of each VER reduces. That would be getting better than nothing.

  17. people are so stupid they deserve what they get! carbon bullshit. environmental nazis. how stupid they deserve what they got

  18. Was there any conclusion about Carbon Offset Consultants of Tokyo, Japan? Has anyone dealt with them? Are they really based in Japan or are the in some outpost such as the Philippines, Indonesia, etc? Can anyone vouch for their staff members James Brooke, David Carter and John Evans? Any experience would be appreciated as I think I might be about to be scammed again.

  19. @Jonathan – I’m writing a post about Carbon Offset Consultants now. I’ll post a link here as soon as it’s finished. Short version: it looks an awful lot like a scam.

  20. Jonathan #23 from my perspective with Carbon Offset Consultants I agreed to go ahead and transfer the registration fee to register my credits on the Tianjin Carbon Exchange, but never did. I have not heard from David Carter since then. I would say it is a scam. I did speak to a helpful company called the Carbon Trade Exchange CTX who informed me that I will never be able to sell my credits as an individual. Best and most honest information I have received to date.

  21. Dear Chris,
    My name is Steven Wardell and it is with much regret that I will no longer be reading your blog. I do hope that your comments policy is one of free speech, and that you will indeed publish this comment. Over the last few months your blog seems to have lost it’s way. It has now been taken over by the constant diatribe of greedy fools who invested in carbon credits. Do you not feel somewhat hypocritical, in the fact that most environmental and REDD issues are caused by the greed of man, and that you yourself and your once wonderful blog have now become the sounding board, and you the champion, of greedy men who tried to profit, from an initiative, designed to address in some way the environmental issues of the day. Carbon credits are not perfect, but the greed of man has done little to aid the cause, and carbon credits are now a bad word. Granted these people were mis-sold, perhaps even defrauded, however it was only greed that put them in that position. I’m fairly sure that not one had a gun put to their head. In short Chris, why are you wasting your valuable time and obvious talent, with these fools. This once informative and interesting blog is now focusing, on how man will exploit even an environmental initiative to make money. My advice Chris, get back to what you are good at, and let the greedy fools start a carbon credit boiler room blog. Your blog is no longer known for it’s addressing of Redd issues, but merely that carbon credit scam blog. I doubt any of these people commenting have any idea what REDD is. Do you not see the irony in what you are doing?

  22. Thanks for the responses Chris and Saul. I look forward to reading your post on this matter Chris. Steven, just keep your hair on. Perhaps you haven’t been contacted by the carbon credit sales people and consider yourself lucky. I was undergoing chemotherapy at the time and the calls I received were relentless and, as it turns out, incredibly dishonest. Unfortunately it’s this type of behaviour by people in the UK, all investments and not just carbon credits that destrying London as a financial centre.

  23. @Steven Wardell – It’s kind of pointless to respond since you’re no longer reading this blog, but I’ll do so anyway. As Jonathan notes, you’ve probably never been cold called by a boiler room – they specifically target vulnerable people.

    It’s interesting to note that despite your obvious fascination with REDD, you’ve never commented on REDD-Monitor before. Instead you decided to complain about the posts about carbon credit scams.

    Believe it or not, most of the posts on REDD-Monitor are about REDD and the problems with REDD. So far this month there have been 18 posts on REDD-Monitor. Of those, four are about carbon credit scams. (In December 2013, there were 20 posts and four about scams.) There’s a simple solution to your difficulties. Don’t read the posts about carbon credit scams.

  24. Chris, thanks for the blog post it was most helpful and I am pleased to have made the right judgement call and avoid losing more money. Jonathan, looks like you can avoid it too. In response to Steven Wardell #29 I actually agree, I was a complete greedy tool getting taken in by the scamsters and perhaps deserve everything I get. But at the same time I am looking to rectify my misjudgement and seeking info and advice anywhere I can get it since there is (was) a distinct lack of it in the ether. This blog has been incredibly helpful and resourceful and would like to thank Chris for bothering to post anything at all. I would disagree that this blog site shouldn’t handle such issues. It is controversial and people should be aware of it I see no harm in posting these facts especially as the aim of VERs and CERs is to help reduce carbon emissions. The fact they (VERs) were mis-sold as investments is merely a consequence of what certain people (boiler rooms, greedy fools! etc) perceive to hold any sort of value and sell (and buy) them on that basis. Perhaps there is an opportunity here to set up a dedicated blog site to specifically publicise these scams but more importantly provide more information to those affected and attempt somehow to support and if possible rectify the problem.

  25. Thanks for the article on Carbon Offset Consultants Chris. That contains very useful information and I definitely will not have any further dealings with the. Effectively they’re the same sort of financial terrorists as the original carbon credit salesmen.

  26. Hi all,as many im holding some carbon credit with AGT in dubai; i think the company does not operate anymore, last week i have been contact by a company called CONSULTANTS EUROPE, ready to buy my carbon credit, but i have to pay a fee. Anybody heard about this company?

  27. 1. Don’t buy carbon credits to ‘hold’ as an investment.

    2. Don’t ever buy anything from cold callers selling investments.

    3. Always check to see if the institution is regulated.

    That’s from advice from a carbon trader.