Today in Carbon Credits

As I have noted the carbon credit market is a particularly criminogenic activity, and we have another example of this, with the CEO of a major carbon credit developer being charged with a massive years long carbon credit fraud.

Hoocoodanode?

On 2 October 2024, the US Attorney’s Office for the Southern District of New York announced criminal charges against Ken Newcombe, ex-CEO of carbon credit project developer, C-Quest Capital LLC. Newcombe was indicted on wire fraud, commodities fraud, and securities fraud. If found guilty, he faces up to 20 years in prison.

In February 2024, Newcombe resigned as CEO of C-Quest Capital, the company he set up in 2008. C-Quest is incorporated in the tax and secrecy haven of Delaware.

Newcombe was a major promoter of carbon trading, having worked at the World Bank, Climate Change Capital, and Goldman Sachs, before launching C-Quest Capital.

He was a member of Verra’s board [The non profit responsible for setting the Verified Carbon Standard for carbon offsets] from 2007 to December 2023.

………

The charges are against Newcombe and Tridip Goswami, former head of C-Quest’s carbon and sustainable accounting team. Jason Steele, C-Quest’s ex-chief operating officer pleaded guilty and is cooperating with the US authorities.

The indictment accuses Newcombe and Goswami of carrying out a fraud from 2021 to 2023 that resulted in their company CQC Impact Investors LLC “fraudulently obtaining carbon credits worth tens of millions of dollars”.

They are accused of “fraudulently altering data to show that CQC’s cookstoves achieved increased fuel savings and by manipulating the data-collection process to make it appear that more of CQC’s stoves were operational than was actually the case”. CQC allegedly received millions more carbon credits than it otherwise would have done because of this fraud.

Newcombe is also accused of using the fraudulently obtained carbon credits to deceive an investor into agreeing to invest up to US$250 million in CQC. The deal also included the investor buying some of Newcombe’s shares for more than US$16 million.

As an FYI, this technology is nothing new.  It's called a, "Rocket Stove", and it is generally more efficient than conventional wood stoves.

Of course, their business model was to use this to generate carbon credits, and there it would be difficult, if not impossible, to get honest numbers for this, so they lied.

The carbon credit markets encourage fraud, whether it is something like this, or as is the casse of organizations like the Nature Conservancy, reselling forests that had already been set aside for preservation.

This is why I favor a carbon tax over cap and trade.