UK-based service offers to convert carbon offsets into EU Allowances (spoiler: it’s not possible)

Published 23:48 on September 29, 2020  /  Last updated at 21:47 on September 30, 2020  /  Bavardage, EMEA, EU ETS, International, Kyoto Mechanisms, Voluntary Market  /  No Comments

A new service is offering to “reformat” carbon offsets into more valuable EU Allowances – a conversion that isn’t actually possible based on the European carbon market's existing rules.

A new service is offering to “reformat” carbon offsets into more valuable EU Allowances – a conversion that isn’t actually possible based on the European carbon market’s existing rules.

UK-registered Carbon Credit Registry (www.carboncreditregistry.co.uk) claims that for a considerable per-tonne fee, it can convert illiquid and low-priced voluntary offsets (VERs) and UN-backed carbon credits (CERs) into EUAs, the main tradable currency of the EU ETS which are currently valued at around €27 (£24.65) each.

The service appears to be aimed at retail investors that are holding VERs or CERs and are desperate to sell them.

A number of British-based scammers have targeted tens of thousands of vulnerable investors over the past decade, using high-pressure sales techniques and guarantees of large returns to coax them into buying cheap offsets that are difficult to sell on for any amount, let alone a profit.

Dozens of new companies have also popped up in that time, contacting investors with the promise of helping them sell their near-worthless carbon holdings – also for a sizeable fee.

The UK’s financial watchdog – the Financial Conduct Authority (FCA) – warns that many of these firms have been established by the perpetrators of the original fraud, in what’s become known as a ‘recovery room scam’.

On its website, which records show was registered in May 2019, Carbon Credit Registry says any interested VER holders “must decide whether they would like to sell their credits in the current format, or have them reformatted into European Emission Allowances.”

“Those who want to sell their credits in the current format must bare [sic] in mind that VER/CER/VCS are worth 0.08 per unit in today’s market, and are projected to stay around this value for the foreseeable future.”

“Others who want to reformat their credits will have to pay their own reformatting costs. These costs will be between 1.00 and 7.00 per unit, depending on which project they are attached to,” it adds, without specifying the currency in question.

During the second phase of the EU ETS (2013-20), big emitters are able to swap a limited number of UN-backed CERs from the Kyoto Protocol’s Clean Development Mechanism (CDM) into EUAs, though this capability is not available to individuals and has been nearly exhausted by compliance entities with just three months remaining in the current trading period.

CERs can also technically be converted into VERs, for example by having the credit approved by the Gold Standard voluntary offset certifier, though the current market value of the credits are similar and well below the price of EUAs.

However, VERs cannot be turned into EUAs.

SCAM ALERT

Carbon Credit Registry’s website says “personal investors” can have any reformatting costs refunded once a sale of the EUAs has been completed, while “corporate investors” don’t qualify for this.

The company also says it provides “an electronic registry system for corporations to transparently register serialised offsets as well as record the purchase, sale, and retirement of project based offsets, branded as VER/CER/VCS/EEA”.

The last acronym in that series is assumed to be the European Environment Agency, as its logo appears at the bottom of the website.

The EEA – a public institution within the EU – provides independent information on the environment and does not issue offsets, nor is it known to be affiliated with any companies that deal in carbon credits.

Carbon Credit Registry’s own logo contains “Verified Carbon Standard” below the company name, suggesting an affiliation with the voluntary offset standard of the same name.

A spokeswoman for Verra, which manages the VCS certification, confirmed that this was not the case.  She added that Verra has sent a cease and desist letter to the company, and is taking action to prevent similar efforts by deceptive organisations.

“We have cooperated with authorities like the London Police and the NY State Attorney General in the past, and plan to continue doing so if we get actionable information,” she told Carbon Pulse.

Carbon Credit Registry’s website also features a large “scam alert” at the top, warning of people purporting to represent the company “who have created links to our Companies House public accounts in order to mislead potential investors into thinking that these persons are associated with us.”

“Please be aware that these individuals DO NOT represent The Carbon Credit Registry (Company number 04925493) and have no connection to The Carbon Credit Registry, or its employees. Their actions have been reported.”

However, the registered company name on the website (Carbon Credit Registry Limited) does not match the company name that corresponds with that UK Companies House registration number (Carbon Registry Services Limited), though both entities do list the same address in Milton Keynes in England.

Online records linked to Carbon Credit Registry’s phone number show people complaining of being cold-called by representatives of other companies including Charles Dickens and WJ Tatem, claiming to want to buy any ‘stranded’ carbon credit holdings and suggesting that any interested investors contact Carbon Credit Registry for help in closing the transaction.

Environmental information website REDD-Monitor has also reported on Carbon Credit Registry.

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