“Find out how to Save Forests and make money.” That’s the offer on the website of an Australian company called Conservation Central Network. “Using the power of the internet,” CCN says, “we are rewarding people for saving the forests one hectare at a time.”
It sounds great. But if it sounds too good to be true, that’s because it probably is.
Conservation Central Network Pty Ltd has its headquarters in Adelaide, Australia. The company was set up by Campbell Scott and Erminio Kotlar and launched in January 2011. The company was registered in April 2004 and has had two other names since then: Network Games Marketing Pty Ltd; and Carbon Central Network Pty Ltd.
A company called Carbon Central Network (UK) Ltd was registered in the UK in August 2011. In April 2014, it changed its name to Conservation Central Network (UK) Ltd.
Here’s how CCN explains how its “Social Marketing Network” works:
CCN has been able to create a highly rewarding business opportunity: members are invited to become independent distributors and create an income based on the sales generated in their network of friends whilst they participate in CCN’s social cause of saving forest area.
CCN explains that having got involved and become a member (by paying CCN) you then encourage your friends, contacts on Facebook, LinkedIn and so on, to become members (by paying CCN). Then all of these new members do the same with their contacts.
A recent presentation, narrated by CCN co-founder Campbell Scott, explains that,
“CCN works to secure and protect large areas of virgin forests, using it’s [sic] unique Conservation Management System (CMS) to produce carbon credits.”
Scott doesn’t provide any details about the Conservation Management System.
CCN buys carbon credits to “help develop long term business and financial benefits, with their Little Green Token Program”. There’s more on the Little Green Tokens later. In the meantime, here’s what they look like:
9,000 carbon credits per hectare!
The company claims to have projects in Papua New Guinea, Australia, Colombia and Peru, with more under negotiation. “From these forests, we are able to generate hundreds of carbon credits per hectare,” Scott tells us.
For $120 you can “help save a hectare”. Scott explains that one hectare produces up to 300 carbon credits per year. He adds that over 30 years, that’s 9,000 carbon credits, at a “market price minimum of $6”, giving a total of $54,000 per hectare over 30 years.
“CCN has access to millions of hectares, so you can imagine the company’s worth on paper,” says Scott.
Let’s pause Scott’s presentation there for a moment. CCN has been running for four years, yet Scott has fundamentally misunderstood the business he claims to be working in.
Here’s a simplified version of how a REDD project generates carbon credits: If one hectare of forest stores 300 tons of carbon and a REDD project prevents it from being cut down, then that area of forest generates 300 carbon credits over the lifetime of the project.
Not 300 carbon credits per year, as CCN claims.
Of course, CCN’s calculations take no account of any costs involved in running the REDD projects that are supposedly conserving the forest. Or any allowances for buffer zones, leakage, or the fact that some areas of forest may store less carbon. And 300 tons of carbon per hectare seems high to me. As does a $6 price for carbon credits.
Scott assures us that each one of the Little Green Tokens is, “Proof that hectares of forest have been saved.” Phew. That’s a relief.
Little Green Tokens
CCN describes its Little Green Tokens as a carbon credit backed crypto currency. Scott explains that,
“An LGT (Little Green Token) is a new digital asset/currency backed by the proof of conservation activities and values created from those activities when creating Carbon Credits.”
Scott explains that CCN “pays” an “eCo bonus” daily into members’ “Retail Sales Accounts”. “Every time $120 accumulates in your Retail Sales Account, you can claim a Token valued at $150.” For each hectare you can claim two Little Green Tokens.
If you choose to save 50, 100, 200 or 500 hectares (as some members have, according to Scott), then CCN will double the bonus volume.
Scott explains that CCN members can “claim the value from the hectares that they’ve helped save”:
“Right now we find that this is probably by far and most the best way for members to claim the value from the hectares that they’ve helped save. Each Little Green Token is worth $150. It’s asset backed by carbon credits. They are actually held at market right now. And we aim to show you what can drive the price of this Little Green Token up.”
Here’s CCN’s slide illustrating this:
Scott continues his sales pitch:
“The social and co-benefit value created underlying each one of these LGTs is around $664 USD. Now the LGTs sit in a carbon credit pool, er, to provide the asset backing.”
The figure US$664 comes from a report produced by Imperial College London in partnership with the International Carbon Reduction and Offsetting Alliance (ICROA). The co-benefits in the report include poverty alleviation, infrastructure development, fuel savings, and nature conservation (soil protection, water regulation, and biodiversity conservation).
Clearly, this figure is not the “Carbon Credit value”, as Scott claims in his sales pitch. And there is no way that the owner of a carbon credit can make any claim to any of the US$664.
On its website, CCN claims to have more than 6.5 million hectares of “forestry under protection”:
“Current CCN land contracts allow for the release of 75 Million LGTs,” according to Scott’s presentation. That’s an awful lot of Little Green Tokens. And an awful lot of money. For CCN.
Nothing more than a pyramid scheme?
CCN’s website includes a disclaimer: “Conservation Central Network is a conservation company and is not an investment company.” That’s the small print. The large print reads, “BUSINESS OPPORTUNITY”.
CCN requires people to pay a fee to join its Social Marketing Network. Once you’re in, you recruit others to join the scheme, who also have to pay the fee. CCN encourages you to take payments in the form of Little Green Tokens – a virtual currency backed by carbon credits. The company claims to offer “a highly rewarding business opportunity”.
Here’s how the UK’s Action Fraud describes a pyramid scheme:
A fraudster advertises a multi-level investment scheme that offers extraordinary profits for little or no risk.
You’re required to pay a fee to enter the investment scheme.
You’re then required to recruit friends or family members to enter the scheme. If you do this successfully, you’re paid out of their receipts. They are then told to recruit others to keep the chain going.
Your money is not actually invested in any product. Instead, it’s simply passed up the chain of investors.
In 2004, a pyramid scheme called LifeWealth8 collapsed. About 30,000 members lost a total of nearly US$20 million. The director of LifeWealth8 was Erminio Kotlar, the man who a few years later launched CCN.