Germany’s environment watchdog has rejected carbon credits for several tons of CO2 emitted by oil firms over concerns that they are linked to fraudulent climate projects in China.
The credits — linked to eight Upstream Emission Reductions (UER) projects in China — were withdrawn due to “legal and technical inconsistencies,” the German Federal Environment Agency, or Das Umweltbundesamt (UBA), said.
The agency said the rejection would mean that no more credits — or UER certificates — can be issued for the eight projects for 2023.
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The move prevents the entry of unauthorised UER certificates equivalent to 214,799 tonnes carbon emissions from entering the market, UBA said, adding it is now reviewing 13 additional projects.
UER projects are designed to help big oil companies meet EU greenhouse gas reduction targets, which require them to make their fuel more eco-friendly.
Projects such as these aim to reduce emissions from oil and gas projects before their raw materials — petrol, diesel and liquefied petroleum gas — are processed in a refinery. A typical UER project aims to reduce flaring of greenhouse gases from the production of crude oil, use renewables in the production of crude oil and improve energy efficiency of the production, storage and shipping of crude oil.
Since last year, however, multiple reports have raised concerns about the authenticity and integrity of such projects in China, many of which are linked to big oil firms such as Shell, Rosneft and TotalEnergies.
Last month, Semafor reported that in one case a whistleblower informed Shell that its Chinese emissions-reduction project “was actually a chicken farm.”
Such irregularities around Chinese projects was set to cost German firms as much as $5 billion, the report added.
The issue has sparked criticism from biofuel producers, who argue they’ve been unfairly disadvantaged by the cheaper but questionable UER projects.
Meanwhile, the disputed carbon credits, which have been available since 2018, are expected to be phased out by 2025. Of the 21 total projects under review, only five have granted full approval for on-site inspections.
The financial impact is still unclear but some experts warn that the costs of the issue could lead to higher fuel prices for customers.
- Vishakha Saxena
Also read:
A Third of Carbon Credits Fail on New ‘High-Integrity’ Criteria
Carbon Offsets Mostly ‘Ineffective’, Slow Net Zero Shift – FT
‘Wealthy Nations’ Fossil Fuel Deals Threaten a Global Catastrophe’
Oil Producers, Carmakers Knew of Climate Risk in 1954 – Guardian
Most Effective Climate Policies Identified in New Study
Firms May Abandon Net-Zero Plans Amid Carbon Offset Uncertainty
China, India Ask Rich Nations For ‘Trillions’ in Climate Finance
