Germany rejects carbon credit certificates for alleged fraud in China

The German Environment Agency said on Friday it had rejected carbon credit certificates from eight projects due to concerns over fraudulent reporting and certification of emission reductions in China.

So-called Upstream Emission Reduction (UER) projects are used by oil companies to meet European Union regulations and targets for reducing greenhouse gas emissions. Companies earn green credits by financing initiatives to reduce emissions in oil production, such as stopping gas flaring.

The German Environment Agency, UBA, is investigating carbon credit projects in China over alleged irregularities in a scandal that emerged several months ago.

The agency found that eight such projects for carbon credits for a total of 215,000 tonnes of carbon dioxide (CO2) failed to meet the standards.

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

UBA will also investigate 13 other projects.

The agency will look into other critical UER projects around the world until all allegations are addressed or cleared up, UBA said.

At the same time, the Berlin prosecutor’s office is investigating 17 CEOs and employees of companies that verify carbon projects and credits on suspicion of commercial fraud, the agency said.

Germany, which launched carbon offset projects in China in 2018, will phase out 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 opposes the idea of ​​companies using carbon credits and offsets outside government-regulated emissions markets to claim emissions cuts, according to a draft document seen by the Financial Times in July.

“Carbon credits used cannot be counted as (polluters’) own emission reductions” when those credits are purchased in markets outside government-regulated carbon markets, the UN task force on global carbon markets wrote in the document seen by FT.

The task force was convened by UN Secretary-General António Guterres, who last year criticized voluntary carbon credit markets as a way to cut emissions.

By Tsvetana Paraskova for Oilprice.com

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