German authorities announced on Friday that they have halted the delivery of carbon credits to several companies suspected of creating fraudulent emission reduction projects in China. The decision follows investigations triggered by press reports exposing a widespread carbon credit fraud scheme involving German oil companies. These companies were participating in climate projects, some of which were found to be non-existent, while others failed to deliver the promised CO2 reductions.
The Federal Environmental Agency (UBA) conducted preliminary examinations of seven cases, uncovering “serious legal and technical incoherencies.” An additional eight cases were found to have violated regulations regarding when they could begin operating. The rejected credits represent emission reductions equivalent to 215,000 tonnes of CO2, which the companies intended to include in their climate balance sheets. The names of the companies involved have not been disclosed.
The alleged malpractice centers around a scheme, suspended since July, that allowed German oil companies to meet legally mandated climate targets through environmental projects in China. Out of a total of 69 projects, 40 remain under investigation by the UBA, with strong suspicions of wrongdoing in 21 of them.
In July, Berlin prosecutors raided the offices of environmental auditing firms suspected of complicity in the alleged fraud. By inflating their climate balance sheets, the companies potentially avoided fines totaling as much as 4.5 billion euros ($5 billion), according to estimates by the German biogas federation. This incident highlights the vulnerability of carbon offsetting schemes and the importance of stringent oversight and verification processes to ensure the integrity of climate action initiatives.
