A carbon offset pioneer, Ken Newcombe, has been charged with fraud by U.S. authorities following an investigation by Channel 4 News. Newcombe, a former Goldman Sachs managing director and founder of C-Quest Capital, was indicted in New York on wire fraud and commodities fraud charges, potentially facing up to 20 years in prison if convicted.
Founded in 2008, C-Quest Capital specialized in running carbon reduction projects in developing countries to earn carbon credits. These credits were sold to major corporations like BP and Shell to help offset their emissions. A significant aspect of C-Quest’s initiatives involved distributing cookstoves, which emit significantly less carbon dioxide than traditional open fires, across various African and Asian countries.
However, a recent indictment released by the U.S. Justice Department on October 3 alleges that Newcombe falsified data concerning the carbon savings from these cookstoves. The indictment accuses him of selling false carbon credits on the market. Tridip Goswami, the former head of carbon and sustainability accounting at C-Quest Capital, has also been charged with fraud.
Channel 4 News conducted an investigation in December 2023, focusing on the trade of “phantom” carbon credits. Correspondent Jamal Osman visited a village in Malawi where residents had received cookstoves from C-Quest Capital. Despite the stoves’ potential for energy efficiency, many were reportedly broken or unused. Out of 30 families interviewed, 16 admitted they were not using the cookstoves, often due to damage.
Professor Barbara Haya, a carbon credit expert from the University of California, Berkeley, provided a quantitative analysis that claimed the cookstove offset programs exaggerated their carbon savings by over six times. She estimated that the actual reduction in carbon emissions was only 44 million tonnes, far less than the claimed 330 million tonnes.
In response to these findings, Newcombe and C-Quest Capital publicly disputed the Channel 4 report, criticizing Professor Haya’s methodology and claiming the allegations were flawed. However, in early 2024, Newcombe resigned from his position at C-Quest Capital. Later that year, the company disclosed that new management had uncovered “wrongdoing” by Newcombe, leading to the sale of “millions” of effectively phantom credits. C-Quest reported these findings to law enforcement and the certification organization Verra, which subsequently announced the suspension of 27 cookstove projects globally.
The recent indictment accuses Newcombe, Goswami, and Chief Operating Officer Jason Steele of conspiring to “fraudulently inflate” carbon savings calculations. This manipulation included adjusting survey results, inflating the number of operational stoves, and failing to account for stoves known to be missing or broken. Allegations of data manipulation were linked to projects in multiple countries, including Malawi, Zambia, Angola, Zimbabwe, Thailand, Cambodia, and Vietnam.
Newcombe has denied the charges, with a spokesman stating that he is battling cancer and expressing confidence that a jury will ultimately vindicate him. Prosecutors have chosen not to pursue charges against C-Quest Capital due to its “voluntary and timely self-disclosure of misconduct” and cooperation with the investigation.