Germany’s Federal Environment Agency (UBA) has rejected carbon credits for 215,000 tonnes (t) of carbon dioxide (CO₂) emissions to oil companies under suspicion of fraudulent activities related to Chinese climate projects.
These projects are aimed at oil companies to help them meet EU greenhouse gas reduction goals.
Companies achieve these goals by utilising plant-based biofuels or undertaking "upstream emission reduction" (UER) projects, the agency said on Friday.
UER projects also enable companies to earn credits by financing initiatives that reduce emissions during oil production, such as halting gas flaring.
The UBA has stopped 159,574t of CO₂ equivalent 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 will come onto the market from these projects".
Concerns were raised more than a year ago regarding the compliance of certain projects. Biofuel producers have criticised the cheaper UER projects, claiming unfair disadvantage.
After legal and technical issues were identified, seven out of the eight project approval applications were withdrawn. The UBA is currently assessing an additional 13 projects.
For all 21 of these projects, the sponsors were requested to approve on-site inspection visits. Only five of these 21 projects have had the UBA receive these approvals without limitations. Two visits have been completed, and three are still pending.
Messner added that “the refusal of on-site inspections is a very strong indication that the project sponsors are not prepared to fulfil their obligations”.
He added that we are ”taking this as an opportunity, among other things, to consider revoking our approval of these projects, and we will ensure that only legitimate UER certificates for new projects come onto the market”.
The Berlin public prosecutor's office is also investigating 17 individuals for suspected involvement in joint commercial fraud.
