Germany Rejects Carbon Credit Certificates Over Alleged China Fraud

Authored by Tsvetana Paraskova via OilPrice.com,

The German Environment Agency on Friday said it had rejected carbon credit certificates from eight projects over concerns about fraudulent emission-reduction reporting and certification in China.

The so-called Upstream Emission Reduction (UER) projects are being used by oil companies to meet the European Union’s regulations and targets of reducing greenhouse gas emissions. Companies earn green credits by funding emission-reduction initiatives in oil production, such as a halt to gas flaring.

The German Environment Agency, UBA, has been investigating projects for carbon credits in China due to alleged irregularities in a scandal that emerged a few months ago.

The agency has found that eight such projects for carbon credits for a total of 215,000 tons of carbon dioxide (CO2) did not meet standards.

UBA has been investigating the projects, all carried out by large international companies, and has found serious legal and technical inconsistencies in seven of the eight projects, the agency said.

UBA will also investigate another 13 projects.

The agency will review other critical UER projects worldwide until all allegations are addressed or cleared, UBA said.

At the same time, the Berlin public prosecutor’s office is investigating 17 managing directors and employees at companies verifying the projects and carbon credits on suspicion of commercial fraud, the agency said.

Germany, which launched the carbon offsets projects in China in 2018, will phase out the carbon credits from UER projects by the end of next year.

Carbon credits and voluntary carbon credit markets have come under increased scrutiny in recent years.

A United Nations task force is opposing the idea that companies use carbon credits and offsets outside government-regulated emissions markets to claim emissions reductions, according to a draft document seen by the Financial Times in July.

“Carbon credits used cannot be counted as their [polluters’] own emission reductions” when these credits are acquired in markets outside of government-regulated carbon markets, the UN task force on global carbon markets wrote in the document seen by FT.

The task force has been convened by UN Secretary-General António Guterres, who criticized last year the voluntary carbon credits markets as a pathway to reducing emissions.