For Immediate Release

Organization Profile: 
Michelle Chan,, 415-544-0790 x214
Nick Berning,, 202-222-0748

Carbon Fraud Guide Details Dangers of Carbon Markets That Are Contaminated By Offsets

WASHINGTON - A new “guide” for would-be carbon
crooks and schemers released today by Friends of the Earth serves as a
warning about the fraud, corruption and gaming abuses that are inherent
to carbon trading systems contaminated with offset credits.

The “American Power Act” proposed
by Senators John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) last week
would create just such a system.
The guide, Ten Ways to Game the Carbon Market,
outlines ten different ways in which fraudsters can game carbon trading
systems. Nine methods have already been successfully carried out. Some
tricks are variations of classic scams such as Ponzi schemes, phishing
and tax fraud. But other cons are more particular to carbon trading.
Michelle Chan, Friends of the Earth senior policy analyst and author of the report, said:
“Carbon offsets are especially
prone to corruption and fraud. Every offset deal requires a story
indicating that the emissions reduction would not have been possible
without offset revenues, or that emissions would have been higher
without the project. Because of this, the offsets market is inherently
rife with opportunities for truth stretching—and outright lies.
“Also, much of the corruption that
we have seen in the carbon markets involves bribes of consultants who
are responsible for verifying emissions reductions from offset
projects. Corruption risks are also high for the entities that grant
carbon credits for offsets.
“The ‘American Power Act’ allows
for some two billion tons of offsets to enter the U.S. market. Not only
does this open the door for fraud, but it also allows the buildup of
subprime carbon in the trading system. Subprime carbon is composed of
carbon offset futures that, compared with regular emissions allowances,
are at relatively high risk of collapsing in financial value because of
failed promises to reduce emissions.
“To make matters worse, at the very
moment the Senate is debating derivatives reform, the International
Emissions Trading Association, a self-interested alliance of Wall
Street traders and carbon polluters, is advocating that these carbon
futures be traded in hard-to-regulate over-the-counter markets, rather
than on more transparent exchanges. This proposal must be rejected.”
The full report can be viewed at



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Friends of the Earth is the U.S. voice of the world's largest grassroots environmental network, with member groups in 77 countries. Since 1969, Friends of the Earth has fought to create a more healthy, just world.

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