The plants that are supposed to make German fuel more climate-friendly have cryptic names. They are called “NWAG” or “GPWG” and if they work correctly, they would, in a sense, prevent greenhouse gases directly at the oil well. For this job, they generate certificates that the oil companies can then credit to their carbon footprint – they thus meet their “greenhouse gas quota”. In theory, at least.
Since 2020, such “Upstream emission reduction“projects, or EUR for short, reduce emissions on paper. It is a billion-dollar business, ultimately financed by fuel customers. Unnoticed, they pay a small surcharge so that greenhouse gases are reduced elsewhere. And most of the time these cents flow to China. There are also plants like NWAG and GPWG there. They have flooded the market for greenhouse gas quotas with so many certificates that their price has fallen massively. Much to the annoyance of the competition in Germany, which sells biofuels, for example – and now earns less.
Last autumn, German companies hired detectives to investigate Chinese climate protection projects. They were asked to clarify where, how and since when greenhouse gases were being reduced there. The result: many of the projects did not exist. Others existed before the German rules were devised, so they were not created in addition to the projects as required. And when a team from the ZDF magazine Front 21 When they looked at the things on site, they found a chicken coop instead of a company headquarters.
“This needs to be clarified urgently.”
There are a total of 60 of these plants in China, 40 of which have been under the scrutiny of the Federal Environment Agency (UBA) for months. The agency is responsible for approving this type of greenhouse gas reduction, and has to rely on the work of local certifiers. For a long time, the officials didn’t notice anything. Too long? “You have to ask yourself how intensively the Federal Environment Agency has investigated this,” says Anja Weisgerber, spokesperson for environmental policy in the Union parliamentary group. “This urgently needs to be clarified.” Last week, her parliamentary group had already scheduled a technical discussion on the topic, and on Wednesday the Environment Committee will be dealing with it. The issue is gaining momentum.
The Federal Environment Agency is also receiving increasing evidence that there could be a large-scale fraud behind the matter. The 40 plants that are now being investigated were each inspected by the same two people at the certifying agencies, says agency head Dirk Messner in an interview with South German newspaper. “Basically, there is a four-eyes principle. But here the four eyes were always the same.” Behind this are two German certification companies, Verico and Müller-BBM Cert.
When asked, Verico said that it was pursuing the investigation “by all means possible”. The chicken coop example, for example, was based only on incorrect coordinates. Moreover, there was “no reason to doubt the trustworthiness of our colleague on site”. The fact that the same people always carried out the checks was due to travel restrictions during the pandemic. “But of course this now offers a good opportunity to express suspicions,” says Verico. Müller-BBM also denies all allegations, but is “investigating them in detail”, as the Kerpen-based company reports.
Meanwhile, the Chinese company Kailong has reported to the Federal Environment Agency: five of its plants are listed as projects, although Kailong has nothing to do with them. Four of these five projects were confirmed by the certification duo. According to Messner, a further seven projects have since been withdrawn, and in eleven cases satellite images have raised doubts that climate protection is actually being carried out on the ground. “We now have plenty of evidence that could point to fraud,” says Messner. The public prosecutor’s office has been involved, as has the German embassy in Beijing.
Meanwhile, pressure on the authority is growing. “This is really a scandal,” says CSU politician Weisgerber. “The Environment Minister must make this a top priority.” The Environment Ministry, in turn, is demanding that the cases be “cleared up as quickly as possible” – but is referring to the Federal Environment Agency.
But there are limits to the pressure. A delegation from Germany is to look at the projects on site. “But for that we need the support of the Chinese authorities,” says Messner. “Otherwise we will find ourselves standing in front of closed factory gates.” His authority cannot simply withdraw licenses on the basis of mere suspicion, despite all the evidence – there is a risk of claims for damages. “Proving this in court is not a trivial matter.” A specialist law firm has also been called in.
Others are the ones who suffer the damage anyway. Of the total of almost seven million tons of greenhouse gases that are said to have been avoided at source with the help of these UER projects, around 1.3 million tons are attributable to cases where fraud is suspected. If you set this at 200 euros per ton, that adds up to 260 million euros. 260 million euros that were collected at the pump for climate protection without saving a single ton of CO₂. It is of little use that the business with these certificates is due to expire at the end of the year.
The biofuel industry is even more frustrated. “For us, all of this is coming too late,” says Elmar Baumann, managing director of the industry association VDB. “The damage is there, the prices for the quota have completely collapsed.” Since the certificates from China came onto the market, the price for the so-called greenhouse gas quotas has plummeted – from 400 to just over 100 euros. But such quotas can also be put on the market by those who switch to electric fleets, develop synthetic fuels or sell biofuels. All of this is now much less profitable.
Meanwhile, the Federal Environment Agency has other concerns. The agency will soon have to deal with green hydrogen from all over the world. In purely chemical terms, it cannot be distinguished from hydrogen that is produced in a less ecological way. This can only be achieved with the help of independent certifiers. “That worries me a lot,” says UBA President Messner. “We need a system to adequately monitor those who are supposed to check.”