Germany’s Federal Environment Agency (UBA) has rejected carbon credits for 215,000 tonnes (t) of carbon dioxide emissions to oil companies under suspicion of fraudulent activities related to Chinese climate projects.
These projects were intended to help oil companies meet EU greenhouse gas reduction targets and earn credits. Companies typically achieve this by using plant-based biofuels or undertaking “upstream emission reduction” (UER) projects, such as halting gas flaring.
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The UBA has stopped 159,574t of CO₂ equivalent in unauthorised UER certificates from entering the market.
UBA President Dirk Messner said: “For eight UER projects in China, for which a decision on activation had to be made by 31 August 2024, we will not carry out the requested activations due to irregularities we have identified.”
He added that “no new UER certificates from these projects will be released onto the market”.
For one project, the UBA refused to issue UER certificates after satellite imaging and technical analyses revealed that operations began prematurely, which is not permitted under Germany’s UER offsetting ordinance. This project alone amounted to 55,225t of CO₂ equivalent in unauthorised UER certificates.
After the UBA raised legal and technical issues, seven out of the eight project approval applications were withdrawn. The UBA is currently assessing an additional 13 projects.
The agency asked sponsors of all 21 projects to permit on-site inspection visits. Only five of these projects approved the UBA’s request without limitations. Two visits have been completed, and three are still pending.
Messner claimed that the refusal of inspections would be “a very strong indication that the project sponsors are not prepared to fulfil their obligations”.
Critics including the German Biofuel Industry Association raised concerns more than a year ago regarding the projects’ compliance. Biofuel producers argued that they’ve been put at a disadvantage against the cheaper UER projects.
”We will ensure that only legitimate UER certificates for new projects come onto the market,” Messner confirmed.
The Berlin public prosecutor’s office is also investigating 17 employees of UER project verification centres on suspicion of joint commercial fraud. Authorities allege that they misled UBA officials regarding the legitimacy or eligibility of multiple climate projects, preventing the state treasury from claiming the securities granted by the project sponsors.
