The examples of greenwashing in the US that attract regulatory intervention from the Securities and Exchange Commission (the SEC) continue to evolve. These US cases provide insights into what might unfold here.

In March 2023, the SEC commenced proceedings against two directors and their respective companies, Clean Energy Technology Association, Inc. (CETA), and Freedom Impact Consulting, LLC (FIC). The SEC is seeking declarations of contravention, disgorgement of profits and civil penalties allegedly arising from the USD155 million these companies raised from 500 investors.

The greenwashing aspect of this case arises from the fact that FIC established investment funds to raise money for the development and sale of a carbon capture unit (CCU) developed by CETA.   The SEC alleges that CETA, FIC and their respective directors fraudulently represented in Offer Documents, Youtube webinars and other marketing materials that:

(a) the CCU used a trademarked and patented solvent to remove around 90% of the CO2 out of streams of natural gas. This allowed the gas to be prepared for sale onsite thereby avoiding the need and costs associated with the shipping of gas offsite to a processing facility;

(b) the used solvent (now saturated with CO2) could be injected into oil and gas wells to improve the quality of the extracted oil and gas;

(c) Exxon’s engineering subsidiary had approved the technology and Exxon had leased CCUs from CETA with plans to lease 400 more over the next five years; and

(d) the revenue generated would result in a 10% quarterly return on investment.

It is inevitable that not all companies will be able to reduce their emissions to achieve the 2030 (and 2050) target without reliance on carbon capture and storage technology or voluntary carbon credits or other technologies. That inevitability will see increased investments in and the continued development of off-set technologies. As seen in the above example, this will, in some cases, carry greenwashing risks to investors, producers and users of this technology. Market participants, regulators, and legal and other advisers will have to remain vigilant to avoid this risk.