Find out how carbon credit trading works, how to avoid scams and what to do if you’re scammed.
A carbon credit is a certificate or permit representing the right to emit one tonne of carbon dioxide (CO2).
Carbon credits can be traded for money, but many investors have reported they can’t sell or trade their carbon credits and so can’t make any profit.
How carbon credit trading scams work
Investors are usually called out of the blue, but contact can also come by email, post, word of mouth or at a seminar or exhibition.
You may be offered carbon credit certificates, voluntary emission reductions (VERs), certified emission reductions (CERs) or an opportunity to invest directly in a ‘green’ scheme or project that generates carbon credits as a return on investment.
Carbon credits and VERs certificates are often ‘certified’, but this certification is voluntary and involves a wide range of bodies and different quality standards that are not recognised by any UK compensation scheme.
The scam may claim carbon credits are ‘the new big thing’ in commodity trading, that industries now have to off-set their emissions, that the government is focusing on green developments or that it’s a growing market.
But investors have reported they can’t sell or trade their carbon credits and have lost any money they’ve invested.
Scammers also target consumers searching for investments online through search engines like Google and Bing. They may offer high returns to tempt you into investing, but some may also offer more realistic offers to appear more legitimate.
If you’re offered an investment opportunity through a search engine, they may not be regulated or authorised by us. You can check the FCA warning list[1] for firms to avoid.
How to protect yourself
Carbon credits are not currently regulated by the FCA. This means you won’t have access to the Financial Services Compensation Scheme (FSCS)[2] or Financial Ombudsman Service[3] if you want to complain.
Even if an FCA-authorised firm is involved in the sale of carbon credits – for example by acting as a custodian or nominee - you have no right to compensation if something goes wrong.
Projects generating carbon credits are usually based overseas so UK authorities have no way of controlling the quality or validity of the schemes.
Always be wary if you’re contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true.
If you're contacted unexpectedly by a financial business or individual, make sure you reply using the contact details on the FS Register[4].
Find out more on how to protect yourself from scams[5].
If you've been scammed
If you’re worried about a potential scam or you think you may have been contacted by a fraudster, report it to us. Call us on 0800 111 6768 or use our contact form[8].
If you’ve already invested in a scam, fraudsters may try and target you again or sell your details to other criminals.
The follow-up scam may be completely separate or related to the previous fraud, such as an offer to get your money back[9] or to buy back the investment after you pay a fee.
