Carbon-ex S.à r.l.: Carbon trading “industry-leader” or just another boiler room scam?

Meet Carbon-ex S.à r.l. “With 30 years bluechip experience, we are an industry-leader in trading carbon credits.” According to its website, that is. Unfortunately, the company’s website provides no information about its 30 years bluechip experience. Carbon-ex was incorporated in Luxembourg in October 2010. And the company’s website was registered only two years ago.

Here we go again. Another company involved in trading carbon credits claiming to be an “industry-leader”. Carbon-ex has been mentioned in comments on REDD-Monitor following a post in January 2012 about MH Carbon. It seems worthwhile to take a look at Carbon-ex, to see how many red flags this company raises based on what we know so far.

On its website, Carbon-ex claims that, “With offices in Luxembourg, and access to Bluenext, Carbonex S.A.R.L are ideally placed to help.”

The company gives its office address as 13 rue de la Fonderie, Luxembourg. The photograph above is of the company’s office on Google maps. It looks nice enough, but, well, kind of small for an “industry-leader in trading carbon credits”. Perhaps more importantly, BlueNext closed its spot and derivatives trading operations in December 2012.

Carbon-ex states that, “According to the World Bank, the global carbon trading market is now worth a phenomenal US$144 billion, up 6% from 2008 despite the global downturn,” and offers “access to this market by trading CERs, VERs and EUAS”.

Actually, the value of global carbon markets fell in 2012 by 35% (from €96 billion in 2011 down to €62 billion). More seriously, for anyone wanting to make money by buying carbon credits, the price of carbon credits fell by almost half in 2012, down to €5.82 per ton, from €11.45 per ton in 2011.

Carbonex explains the process of investing in carbon credits. Carbon-ex buys the carbon credits, investors contact Carbon-ex and open a trading account, then, “Sell the credits on to businesses who supply companies and organisations with carbon credits, and enjoy a potentially significant return on investment based on the value of the credits.”

It’s worth comparing this to a statement that the UK’s National Fraud Intelligence Bureau put out in June 2012: “If you buy carbon credits you WILL NOT make any money no matter what the salesman says.” (Strangeley, the statement has been removed from the NFIB website, but a copy is available here.) The director of NFIB, Detective Superintendent Dave Clark points out that,

“The investment ‘opportunities’ are constantly evolving, ranging from shares to land to carbon credits to precious metals, but the objectives of the fraudsters remain the same – take all the money they can possibly get.”

“Who’s buying them?” asks Carbon-ex on its website. It’s a good question. If no one buys your carbon credits you won’t make any money. To reassure potential investors, Carbon-ex’s website has a series of company logos belonging to companies that are using carbon credits. These include EDF, Sky, UPS and the UN’s office for disaster risk reduction. But there’s a catch. “These are intended as examples only and have no association whatsover [sic] with Carbonex S.A.R.L.,” a note following the logos explains. But Carbon-ex is keeping quiet about the fact that companies buying carbon credits want recent vintages. Vintage refers to the year that the reduction took place. On its website, Carbon-ex doesn’t mention how old the carbon credits it is selling are.

Nowhere on Carbon-ex’s website, as far as I can tell, are the names of any people who work at the company. According to Open Corporates, the company is registered in Luxembourg, but I could find no mention of Carbon-ex on the Luxembourg Registry of Companies.

The company’s website was registered on 25 February 2011. It was registered by Tony Lentino of Instra Corporation a New Zealand company that sells web addresses. (Lentino recently became CEO of Mega, Kim Dotcom’s latest venture). Of course that doesn’t mean that there’s any connection between Lentino and Carbonex.

Carbonex also used to have a German office and website. This website was registered in the name of Norbert Przibilla, a German who was director of a UK registered company called Carbon-Ex Nominees Ltd, until September 2011. The other director of the company is Qaisar Abbas, who is also director of Cex Trading Ltd and Carbon-Ex Ltd.

• Carbon-Ex Nominees was incorporated in October 2010. It’s current status is non-trading. It’s only shareholder is Carbon-ex S.à r.l.

• Cex Trading Ltd was incorporated in September 2011. Qaisar Abbas is the only director and the only shareholder. More than 22,500 companies share Cex Trading Ltd’s registered address in London – it’s an address that can be bought for £45 per year (plus VAT) from a company that offers registered office addresses.

• Carbon-Ex Ltd was incorporated in April 2011. The company’s current status is non-trading. It shares the same address as Cex Trading Ltd. There were two other directors, James Pettitt and Detlef Bruno, but they left the company in 2011. Abbas is the only shareholder.

A Carbonex UK website was registered on 23 August 2010 under Carbonex’s German address.

Przibilla set up Carbon-ex S.à r.l. in Luxembourg. The company Statutes, dated September 2010, explain that,

The purpose of the company’s business is to buy and sell emission allowances and certificates and trade in any other environmental rights goods and services.

In September 2011, Przibilla resigned as manager of Carbon-ex S.à r.l. and was replaced by Qaisar Abbas. Przibilla transferred 500 shares in Carbon-ex S.à r.l. to Carbon-Ex Ltd. In July 2012, 500 shares were transferred to Abbas.

According to a post on Just Answer’s website, last year Carbonex sold 1,000 carbon credits from New River Landfill Gas Methane Destruction Project in Dublin, Virginia, USA for US$9 each (for a commission fee of US$45). The project number isn’t the same as the the number on the Carbon Action Reserve registry and the project isn’t listed on Carbonex’s website. This seems like a high price, although from the information given, we don’t know the vintage of the carbon credits that Carbonex was selling. There’s a nice explanation of why vintage is important on a discussion forum by someone describing themselves as a professional working in the carbon industry:

When you are buying wine it is generally true to say that buyers will pay a higher price for older vintages than they will for the newer wines. When you are buying bread it is generally true to say that the fresher the bread the higher the price. It is the complete opposite to wine. Carbon credits are the same as bread and nothing like wine.

The same commenter explained that, “I can buy VERs and CERs in the market for less than £1 each. Yes, even the CERs.” And added, “If I can do it then so can these carbon firms.”

The best part of the Carbonex website is the small print. This is the red flag that applies to anyone wanting to buy carbon credits as an investment. At the bottom of every page on its website is a notice that warns that,

Carbon Credit prices can go down as well as up. It may be difficult to obtain true market process for VERs as many are transacted “over the counter” and as such values may vary from reseller to reseller. There may be a big difference between the buying and selling price of carbon credits. You may in extreme cases lose your total investment amount trading in carbon credits.

Without the words “in extreme cases” it would be even better.

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