Interview with Wayne Sharpe, CEO of Carbon Trade Exchange, about the forthcoming auction of 1.5 million carbon credits from a cookstove project in Malawi
Interview with Wayne Sharpe, CEO of Carbon Trade Exchange, about the forthcoming auction of 1.5 million carbon credits from a cookstove project in Malawi
“Carbon Credits authorized and certified as ITMOs are more valuable than Voluntary credits,” according to CTX.
From 16 to 23 July 2024, Carbon Trade Exchange will hold an auction of 1.5 million carbon credits. The carbon credits come from a cookstove project, the Malawi Biomass Energy Conservation Programme, which is run by an Irish company called Hestian Innovation Ltd.
The carbon credits are, according to CTX, “authorized and certified as ITMOs [Internationally Transferred Mitigation Outcomes]”. And CTX adds that ITMOs are “more valuable than Voluntary credits”.
On 9 July 2024, Carbon Trade Exchange posted an article on LinkedIn under the headline “The Paris Agreement: Death by a Thousand Cuts”. The article is a response to questions raised in the media about whether a country might withdraw a Letter of Authorisation under Article 6 of the Paris Agreement.
Wayne Sharpe, CTX’s CEO is concerned that “Now, negative media has caused some buyers to hesitate in our ITMO Auction.”
REDD-Monitor sent some questions to CTX by email and asked for an on the record response. Sharpe’s replies are posted below in full and unedited.1
REDD-Monitor: The auction is selling 1.5 million carbon credits from the Malawi Biomass Energy Conservation Programme. Yet according to the Gold Standard registry (from the link on the CTX website) only 75,097 carbon credits have been issued from this project (42,830 in 2021 and 32,267 in 2022). Could you please explain this discrepancy?
Wayne Sharpe, CTX: This is a Programme of Activities — so each batch of credits is issued as the Batch Fills. There are over 55 smaller batches in the 1.5 Million held in CTX Escrow.
Unfortunately there are some technical restrictions in the GS Registry to show the PoA overview. We have 1.5 Million Credits in CTX Escrow.
We can screen share with Registered buyers to show that if required.
The Gold Standard PoA process allows an overriding program to operate to include multiple towns, villages or regions over time in the nation, for greater benefits to the people.
As the PO says:
“We have reached over 700k households and 1,200 institutions in Malawi since 2008 (which then had a population of c.a.14 m). In the first 4 years we reached about 25k households and learned quite a lot in the process. We have managed to survive quite a lot of peaks and troughs in what is a very precarious market.
“The population of Malawi is now over 20 m (>4 million households) and growing. There are many households, probably the majority, that still predominantly meet their daily cooking and water heating needs using a 3-stone fire.
“To reach millions of households that have not yet been reached in Malawi with cleaner cooking, the Government launched its Cleaner Cooking Energy Compact in 2021 at the UN High Level Dialogue for Energy that aims for universal (i.e.100%) access to Clean Cooking by 2030 (to be financed 100% by climate finance).
“To be clear, the 550k households reached in GS11677, (transitioned from CDM PoA 10182), since 2015 are additional and new. To reach millions more, we need to strengthen the momentum by monetising credits now, to mobilise production groups, procurement, training and distribution throughout the country.”
REDD-Monitor: The CTX auction was delayed (from 27 June - 5 July 2024) to 16 - 23 July 2024. Why was the auction delayed?
Wayne Sharpe: As we announced: “The response to the ITMO Auction and the availability of high-quality credits at an attractive starting price has been phenomenal.
“However, circumstances unrelated to CTX, Gold Standard, or the Project have created a ‘perfect storm’ that caused a delay in the Auction start date, by approximately 2.5 weeks.
“Events such as London Climate Week (UK), IETA Latin America Climate Summit, have led to many individuals and decision makers being away from the office.
“Moreover, the onboarding process for numerous corporate buyers involve comprehensive due diligence on both sides, which would have been challenging to complete within the original timeframe. Therefore, the revised dates for the Auction will commence from Tuesday, July 16th, with a closing date of Tuesday, July 23rd, 2024.”
REDD-Monitor: I understand that anyone who is not a CTX member taking part in the auction has to pay a non-returnable participation fee of US$5,000 plus US$20,000 to cover auction buyer fees. Isn’t this somewhat unusual? Doesn’t the seller usually cover costs in an auction?
Wayne Sharpe: Perhaps you have been in different Auctions? In Carbon there are always fees (or margins to the Auction) to all participants.
As always we chose transparency of fees. FYI just Friday we have waived the $20k pre-paid fees to allow smaller bidders in.
If they cannot pay $5k they are not serious at all — it’s not a spectator ‘sport’.
REDD-Monitor: What percentage of the sales of carbon credits in the auction will go to CTX, GEM, Hestian Innovation, the Government of Malawi, EY, and any other organisation that might be involved?
Wayne Sharpe: Our fees are Transparent — 2.5% to the Project (he is CTX member) and 1.5% to the Buyer (previously $0.20 cents per credit).
The Malawi Government will disclose their % in an announcement overnight.
REDD-Monitor: Please explain why you think companies or governments would buy Article 6 ITMOs (Internationally Transferred Mitigation Outcomes) before the rules for Article 6 have been finalised at the UNFCCC.
Really? If you re-read the Paris Agreement — without ITMOs there is no hope of staying under 2 Degrees warming — ZERO.
REDD-Monitor: Your press release (dated 3 July 2024) states that “there has been immense coverage over the implication that a Host Nation might withdraw a Letter of Authorisation (“LoA”) under Article 6 of the Paris Agreement”. Please provide a few links to this "immense coverage". (I found two articles — but wanted to check that this is the kind of thing that CTX is referring to.)
Wayne Sharpe: This is the ‘kind of thing’!
It has been far more widespread than you have seen, but as per the first link — that only reinforced my exact point of WHO is making this an issue.
REDD-Monitor: “Finding High Quality ITMOs since we launched the Auction concept at COP28, has been like digging for gold,” says CTX CEO, Wayne Sharpe. Yet recent research suggests that cookstove projects are particularly prone to exaggerating the number of carbon credits generated. The Guardian headline, “Cookstove carbon offsets overstate climate benefit by 1,000%, study finds”, sums up the problem. The carbon credit ratings agency Calyx Global states that “Currently, most cookstove projects do not receive a strong rating from Calyx Global.” Doesn’t this concern CTX?
Wayne Sharpe: If the Guardian is your font of wisdom I am sorry to say I am surprised.
They and the authors have cherry picked the data from that ‘STUDY’ – which is ‘driven’ by nature based interests — vested interests.
Needless to say, the C-Quest board voluntarily disclosed what they say is FRAUD by the former CEO. Every financial market on earth cannot be totally protected from that.
In fact, would your blog exist without this to ‘discover’? However, I spoke to the new CEO last week, and C-Quest has sufficient credits held in reserve to apply as its own ‘buffer’.
You might see that later this year in my view.
Its a giant leap to accuse ALL projects of one type of Fraud because of one company or person.
Until today — your email — I had never heard of Calyx Global, but they appear to be another of the parasites ‘rating’ projects for money — and doing nothing but that?
I note that NONE of the ‘Partners’ listed on their Website are links. . . . We wonder why?
And their ‘About’ https://calyxglobal.com/about tells a deeper story of many people who create . . . what?
https://www.climateandlandusealliance.org/about-us/alliance-team/
https://www.packard.org/about/our-people/
In summary: No matter what your views on each project type – we need more of EVERYTHING.
And we need less people trying to question quality (for money) because we only have one planet — we both live on.
I have made a few small changes — for example, correcting spelling mistakes and inserting full stops and the end of sentences.
Thanks for sending such good questions to the project leader. It makes vivid how complicated and convoluted the market is. Are you going to write a reflection on his responses? I would like to read your thoughts on his arguments.
Thank you, Chris for more "negative media"! Here’s a little thought, and you heard it here first: “The economy is an externality to the environment.” This creates an incongruence when one tries to apply economic measures to the environment - it is like you hit “C” on the piano and some other note sounds. There is always some misfit and the intended outcomes can never play out according to plan. And there is no “profit” outcome in Nature, while economic measures always fail unless the perpetrator can collect a profit.