Introducting Graham Corby

In April this year, when I first began working on carbon credits, I had copies of two lots of irregular carbon credits from Papua New Guinea. One was the Kamula Doso series which had been recently issued to Nupan Trading, owned by Kirk Roberts. The other set, the 'A' series dated back to 2005 and had been issued by a company called ClimateAssist, seemingly with the backing of the government.

Support for the apparent backing of the government in these credits came from a signature on the credits that appeared to be by a government minister, and an associated letter that gave the company ClimateAssist the right to monetise these carbon credits on behalf of the government.

The company ClimateAssist is in fact an Australian gentleman called Graham Corby. I spoke with him several months ago. The first thing to say is that if anything in what follows remains unclear this is not for lack of trying on my part. Mr Corby has failed to follow up on his promise to send me more information about his carbon credit generating scheme, and since I published his carbon credits, doesn't want to talk further about his business. But he told me plenty in April, so lets begin with that, because I sense I am not the only person interested in his activities at present.

Mr Corby claimed he was assisting Papua New Guinea in the sale of these carbon credits. The idea he said was to "use some of the credits to do projects up in Papua New Guinea". He told me, "The Papua New Guinea government gave us the credits and made us the brokers to monetize the credits." So I asked Mr Corby, what does it mean, exactly, to monetize the credits? Does it mean to sell them? He said, "Yes and no. There's companies that want to loan money against the credits and they want money back after the projects are finished". He continued, "Some companies want to buy them, but they're not in a position to buy them until the REDD thing comes in with Copenhagen at the end of the year. But other companies are looking at lending money to us to do the projects and then we pay them back over a four year period." In other words, the credits being offered were printed prior to any actual project to produce carbon emissions reductions.

Mr Corby agreed that the credits I had were his, and had been used to start his business, but that they had changed dramatically over the years. "We couldn't get them into trade or anything like that. And I had to go back to Papua New Guinea, it was 2007, and get others issued, and then I went back in 2008 and we got the last original ones issued". The serial numbers are the same, he added. "Because we couldn't do anything with the first two lots".

What was wrong with the original lots I asked? "Companies I was working with were not in a position to put funds there. Once Australia signed and ratified the protocol last year, we got new ones issued and the power companies actually took them as voluntary credits against the Australian government fining polluters". He added, "well they haven't bought them. They're in the process of lending money to us. They won't buy them until Copenhagen".

Have you paid the government of Papua New Guinea for these credits, I asked? "...We haven't paid them because we haven't sold them. And we, until Copenhagen comes into force we can't get any of the loan funds. But once it does come in then we'll have the loan funds to do projects there. What we've been doing has been on our own initiative and our own funds"

I'm confused, I say, how is it that the government can issue credits before they're actually generated?

Mr Corby: "They're not issuing them. ClimateAssist is issuing them on a voluntary basis from company to company"

Me: Right.

Mr Corby: "It's a company to company deal."

Me: "Are you allowed to do that?"

Mr Corby: "Oh yes. It's voluntary participation."

Me: "Right, so because the company, the power companies are voluntarily saying that they'll voluntarily buy them from you, then it's OK for them to be credits that haven't actually been generated?"

Mr Corby: "Haven't been generated until Copenhagen. Once that's been. Once Copenhagen is in then we can go back to the government and say right, you've got them there, here's the money, and generate the true credits that aren't voluntary."

So there you have it, once Copenhagen has come in, Mr Corby will be able to go and generate the "true credits that aren't voluntary".

So what about money? How much does he think these deals would be worth? Mr Corby said, "at the moment we've signed a joint venture agreement with one company and we're, we have sold them for $12 USD a tonne." You'll have to do the maths for me, I've no idea what that is, I said. He replied, "Eh – It's huge. I haven't got that in the brain, It is huge. " As for the project deals he says, "There's one that's 50 million USD, another that's 32 million, and another that's 27 million". (If you look at the notes on these "credits" one set claims to represent 87,460 million metric tonnes of carbon, the other 33,333,333 million metric tonnes.)

Mr Corby said that no money had passed hands between his company and government officials, adding that there was "a financial arrangement that if REDD comes in we would provide money for that office to operate". (This claim was first published by Reuters just prior to my first article on the subject, but as yet it remains unverified as to whether any such arrangement was ever actually officially agreed to by the government of Papua New Guinea.)

So what are all these carbon avoiding projects that Mr Corby is working on? There are projects all over the country he claimed but would not say where. He said some involve coffee projects where coffee is planted in the forest, instead of outright deforestation, another involves planting trees for the paper industry so that government doesn't have to cut down trees in the forest, and there is even a palm oil project. Are they REDD projects I asked? "They will be REDD projects if the Copenhagen summit is ratified. If it is not, then these projects are projects that can produce funds to pay back the companies that are investing with us".

Mr Corby seems to be arguing that various projects that would be financially viable in their own right, might also qualify for REDD credits if the deal is done in a particular way at Copenhagen. For example, I asked him why he would get carbon credits for planting trees for the paper industry, he said that two would be planted and only one would be used to make money. "The other tree stays there for eternity".

The international community is very keen on 'learning by doing' as a way of figuring out REDD, but I can't imagine that these are the kinds of deals that everyone had in mind. And is this part of a broader concern about creating the perverse incentives for cutting down forests and putting in plantations?

Finally, before everyone rushes in to blame the government, I think it is worth reminding ourselves that in June, The Office of Climate Change in Papua New Guinea added to the story by issuing a statement about Climate Assist saying:

"This company sought to negotiate Carbon Credits in the market places that were not issued by this Office. This Office has had no dealings with this company in respect of credits issued. We were aware of this some months ago. We have our lawyers pursuing this matter with foreign law enforcement agencies as a matter of fraud. As such we cannot comment further on it." I've also received information which backs up this notice in the form of a cease and desist notice issued late last year by the Office of Climate Change to Mr Corby.

N.B. These credits were first issued prior to the creation of the Office of Climate Change, so the statement doesn't actually answer the question of whether someone in government did become involved in promoting the brokerage of credits through Mr Corby as early as 2005.

I think the final word in this very curious, and opaque story, must go with Mr Corby himself:

"We are issuing voluntary credits between my company and other companies. That's why we have to give the money back to the other company. But these companies then go to their government and say we're supporting these projects, and they then are given a breaks from their government because they're supporting something that's green." Mr Corby went on to explain that these were power generating companies, two in Germany, one in Canada, and two in Japan. He wouldn't be specific about which companies these were and said that they would only discuss these deals after Copenhagen."