Dutch Green Business Group attempts to mislead investors by confusing the price of carbon offsets with the price of carbon allowances
This morning REDD-Monitor received an email from the Investor Relations team at Dutch Green Business Group telling me that “The price of CO2 reduction has risen to more than 100 euros per ton for the first time in history!”
On 21 February 2023, the price of carbon on the EU Emissions Trading System hit €100 for the first time. A series of reports celebrated the news as reflecting “the increased costs that factories and power plants must pay when they pollute”.
But as journalist Alessandro Vitelli notes on Twitter, at least some of the reporting could easily lead to confusion about the difference between carbon permits and carbon credits. He highlights an article in the Financial Times, which mistakenly uses the word “credits” instead of “allowances”:
The price of carbon credits in the system — a core part of the bloc’s net zero strategy which aims to put a price on pollution — has risen fivefold in the past three years, and gains have accelerated in recent weeks as the EU has tightened rules to make the system more onerous for polluters.
This is something that Vitelli has pointed out several times over the years. Carbon offsets (or credits) and carbon allowances (or permits to pollute) are very different things:
Carbon offsets do not reduce emissions. For every offset sold from a carbon project there is a buyer (often a Big Polluter) who uses the offset to continue burning fossil fuels. The offset markets are not regulated.
Carbon allowances are issued under cap-and-trade schemes. They exist in a regulated market and are issued by the regulator. Some cap-and-trade schemes (such as California) allow companies to buy offsets to meet their cap. Since 2021, the EU ETS does not allow offsets.
Dutch Green Business Group attempting to cash in on confusion
In today’s email, Dutch Green Business Group’s Investor Relations team uses this graphic to illustrate the “upward trend” in what it calls the “Price of CO2 reduction in the EU since 2010”:
This graphic should, of course, have referred to the price of CO2 allowances (EUAs).
The Investor Relations team then moves from the price of carbon allowances (which it calls CO2 reduction) to carbon credits (which it calls CO2 reduction credits), without clarifying that these are not at all the same thing:
With these record high prices and the increasing worldwide focus on carbon neutral business activities, we are convinced that our projects offer significant growth opportunities.
DGB's projects generate CO2 reduction credits by developing and managing large-scale nature projects. An increasing demand for CO2 reduction has a very positive effect on our projects.
In its Financial Outlook, posted on its website in January 2023, Dutch Green Business Group anticipates selling somewhere between 5,487,000 carbon credits and 8,570,000 carbon credits in the next ten years. It hopes to make anywhere between €79.8 million and €160.8 million from sales of these carbon credits.
That would suggest a price of at least €14.54 per credit.
Which is ambitious, to say the least. The reality is that the price of Nature Based Offsets has fallen steadily over the last 12 months:
In August 2017, the Netherlands Authority for Financial Markets (AFM) ruled that Dutch Green Business Group's Chief Executive Selwyn Duijvestijn had disclosed "incorrect and misleading information" about Mountain Shield Capital Fund. Duijvestijn was fund manager of Mountain Shield.
While the regulatory authority did not impost any fine on Duijvestijn over that case, it would perhaps be worthwhile for the AFM to take a quick look at some of the misleading claims that Dutch Green Business Group is making about the price of its carbon offsets.
Dutch Green Business Group has previously appeared twice on REDD-Monitor. The company’s reputation is not exactly helped by its association with Nigel Farage: