EDITORIAL: One step forward, two steps back for the voluntary carbon market

Quantum Commodity Intelligence – The last thing that I really wanted to do with this page is to concentrate on another carbon market scandal, but it is difficult to ignore what has unfolded in the last week regarding cleaner cookstoves project developer C-Quest Capital (CQC). The company said late on June 26 that it had discovered "wrongdoing" by its former chief executive and founder  – carbon market veteran Ken Newcombe – and several other previous employees.

"In early 2024, a Special Committee of non-executive directors of C-Quest's board of directors commissioned a global law firm to conduct a review of C-Quest's operations and help inform potential corrective actions," CQC said. The exact nature of the 'wrongdoing' has yet to be fully revealed, but it has been enough for US-based registry Verra to put 26 cookstoves 'on hold' and under review. Sixteen have C-Quest Capital entities listed as the proponent, with the remainder attributed to multiple proponents.

"Given C-Quest's voluntary submission of the findings and its stated commitment to cooperating with Verra, we hope to finalise this review as quickly as possible," Verra said in a statement. It added that, "if proven", the allegations by CQC against Newcombe "would indicate serious malfeasance and a direct attack on the principles underpinning confidence in this market".

In addition, Singapore-based exchange Climate Impact X (CIX) has since suspended 25 of the projects from delivery against its 'CIX Cookstoves X – Developing Countries Verra' and 'CIX Cookstoves X – Least Developed Countries Verra' contracts. "In total, all credits from the 25 affected projects have been unallocated from the CCX-DV and CCX-LV delivery baskets, and no new credits can be allocated to the contracts until further notice," it said.

Denial

Newcombe has denied the allegations, saying they are part of a plot by a private equity firm to seize control of the project developer.  "Dr Newcombe categorically denies the allegations made against him, which are part of a coordinated scheme by private equity firm Vision Ridge to coerce Dr Newcombe into giving up his majority shareholding in C-Quest Capital, a company he founded and built over decades," said a statement from a spokesperson for Newcombe.

"It is clear that Vision Ridge – a minority shareholder that has gained de facto control of C-Quest's board of directors and is behind the company's press release – is driven by financial opportunism and is willing to engage in public relations gamesmanship and other misconduct to get what it wants: a windfall profit at Dr Newcombe's expense," the statement said.

"We are confident that when all facts of this situation become known, a very different story than the one Vision Ridge has put forth will be revealed," it added.

So at the moment, the market is experiencing a situation where Verra is now reviewing an additional 26 projects – bringing the total on hold in the Verified Carbon Standard registry to 81 at the time of writing. And another, which is likely to keep law firms busy in the coming months, of CQC against Newcombe and the other former employees. 

This is another shock for a market making tentative steps forward after a number of other 'scandals' over the last year-and-a-half, not least because of Newcombe's pioneering role in managing World Bank carbon credit funds 20 years ago, and his involvement in founding the VCS, now more recently known as Verra.

Newcombe stepped down from his CEO role at CQC in February and was replaced by Jules Kortenhorst, previously a partner at real assets investor Vision Ridge Partners. However, the 76-year-old Newcombe is currently still the company's vice chairman, according to his LinkedIn page.

I'm not sure where this leaves CQC going forward, but for the voluntary carbon market this is another public relations boost for the anti-marketeers. Not what is needed in a year that really requires stability and clarity, not the least on carbon market mechanisms under Article 6 of the Paris Agreement – for which credits from cookstoves projects (not CQC's) are currently the ones securing host country letters of authorisation.