Carbon-Expert: Another boiler room scam?

Carbon-Expert is another company selling carbon credits as an investment. As with other companies selling carbon credits, the question is whether this is another boiler room scam. Carbon-Expert’s website certainly includes potentially misleading information.

Such as this, attributed to Fortune Magazine (but undated): “All the big global investment banks including Barclays, Citigroup, Goldman Sachs and Merill [sic] Lynch are hurrying into carbon finance.” A Google search for the statement reveals that the same statement also appears on the websites of Edgebrook Carbon Invest, Eco Carbon Credits, Carbon Discount and Advanced Global Trading. The statement may have been true several years ago, but the reality today is that several banks have closed their carbon trading desks or laid off staff, when they are not being raided by the police for involvement in value added tax scams.

Here’s another, attributed to Barclays (also undated): “United Nations carbon credit prices may rise as much as 42% by 2012.” This is from a Bloomberg article dated 29 October 2010, and is a quotation from Trevor Sikorski, a London-based analyst at Barclays Capital. In December 2012, the price of UN carbon credits crashed to 15 cents. In any case, Carbon-Expert, according to its website, sells “VCS verified Carbon Offsets”, voluntary carbon credits, in other words, not UN credits.

In a comment on REDD-Monitor, David Martin, the Managing Director of Carbon-Expert, wrote, “I set up carbon expert in an ethical and transparent way, with a specific set of ethics and rules.” Perhaps wisely, he doesn’t explain what those ethics and rules are.

Carbon-Expert was incorporated in the UK in April 2012, with David Martin as the only director. The company’s website was registered nine months previously. The company’s registered office is 50 Jermyn Street in London – an address offered by several virtual office companies. Carbon-Expert also has an office in Marbella, Spain.

The company’s website includes the names and photographs of five of the people who work at the company. In a 2012 “Meet the Team” company presentation, Carbon-Expert claims to be “The UK’s Leading Carbon Trading Company”. The presentation includes eight more people who work (or worked at the time) at Carbon-Expert:

In addition to its main website, Carbon-Expert also has two blogs: carbonexpert.wordpress.com and carbonexpert.blogspot.com. The most recent article on both is dated January 2012, with the headline: “How to profit from trading carbon credits”. The article includes this paragraph:

Private investors, through a carbon credit broker, can get access to these credits on exchanges, and trade rising demand for credits to make a profit and to channel funds into these projects, helping them grow.

Another potentially misleading statement. The article does not point out one of the key problems with carbon credits as an “investment”, which is that that older a carbon credit is, the less it is worth.

Carbon-Expert’s website includes a list of companies that it is working with. A series of press releases explains more. Carbon-Expert also puts out a newsletter. The most recent, for April 2013, boasts of projects with Emirates Palace Marina, The Arabian United Float Glass Company, and “a collaboration agreement with one of the biggest hotels in Dubai to measure their carbon footprint whilst assisting them with their environmental policy”.

In October 2012, Carbon-Expert announced that a UK-based building firm, TAG Construction (UK) Ltd, had engaged Carbon-Expert and “committed to working towards becoming a carbon neutral company”. Strangely, however, there is no mention on TAG Construction’s website of their aim to become “carbon neutral”. Neither is there any mention of working with Carbon-Expert. All there seems to be is a vague statement about taking “environmental responsibility very seriously”, aiming “to implement suitable policies and arrangements”.

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UPDATE – 5 April 2013: See the response from TAG Construction (UK) Ltd’s David Mullett to REDD-Monitor’s questions, here.

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Carbon-Expert’s website features a series of logos: APX, SIPP, Carbon Trust, and NYSE Blue. APX describes itself as “the leading infrastructure provider for environmental and energy markets”. There is no mention of Carbon-Expert on APX’s website. SIPP stands for self-invested personal pension, which is a UK-government approved personal pension scheme. SIPP investments in any carbon credits are tax free. Carbon-Expert claims that,

Carbon-Expert liaises with regulated pension experts during the early due diligence stages to ensure that each individual investment is SIPP qualified. The structure and paperwork of all our recommendations have been designed in accordance with SIPP guidelines.

The Carbon Trust is a UK-based company that provides advice to governments and companies about low carbon developments. There is no mention of Carbon-Expert on the Carbon Trust’s website.

NYSE Blue is a carbon trading joint venture between APX and NYSE Euronext, established in 2010. The company’s website seems to be down.

In his comment on REDD-Monitor, David Martin asks people to ring him so that he can “give you a true and honest picture of a market as a whole, as opposed to opinion, advice, or any comment that can be passed on this forum”. In fact, Carbon-Expert’s website provides an excellent picture of the market as a whole, in its risk warning:

Risk Warning: All carbon credits have been duly vetted and full due diligence has been carried out on them; however the purchase of these may not be suitable for all investors. The purchase of these as an investment is consider [sic] for the less risk adverse and you should be reminded that investments can go down as well as up and an investor may get back less than the amount invested. Information on past performance, where given, can not necessarily be a guide to future performance.

Carbon Expert, the carbon credits introduced and any associated companies offering them, are not regulated by the Financial Services Authority and therefore there is no recourse to any regulatory compensation schemes such as the Financial Services Compensation Scheme (FSCS) or Financial Ombudsman Service (FOS).

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