Industry Reference：Germany Finds Problems With Chinese Carbon Projects

Germany allowed companies to use UER (UPSTREAM EMISSION REDUCTION VERIFICATION) certificates to help meet their fuel emissions obligations. The system attracted interest because it offered a relatively low-cost way to reduce reported emissions.   However, German authorities began finding serious problems in several projects.

In September 2024, the German Environment Agency (UBA) announced it blocked certificates for 215,000 tonnes of CO2 from eight Chinese projects. Seven project applications were withdrawn after UBA identified serious legal and technical inconsistencies. In another Chinese project, UBA rejected certificates after finding that the project had started too early.  The agency also said it was investigating additional projects and had asked project operators to allow on-site inspections. The latest action goes much further, with authorities withdrawing credits from 30 Chinese projects.

30 Projects, 2.1M Tonnes and Growing Questions

The 30 projects together claimed about 2.1 million tonnes of emissions reductions. That is roughly equivalent to the annual emissions from 500,000 cars, according to reporting on the German findings.  The investigation originally identified 45 projects as suspicious. Authorities have now withdrawn credits from 30 of them. However, the full picture is still developing.  Germany’s report names only six projects, while information on 24 projects remains redacted because investigations are still underway. The revocation decisions for the six named projects are final, according to Bloomberg’s reporting. This means it would be too early to describe every project in the wider investigation as fraudulent.  German authorities found enough issues to revoke credits from 30 projects. They are still investigating other cases.

The German investigation focuses on the projects and the claims behind the credits. This distinction is crucial. Companies can purchase credits in good faith and still face losses if authorities later invalidate them.

The case highlights a wider problem for carbon credit markets. Even credits used in a government-backed compliance system can face questions over whether the promised emissions cuts actually happened.

Beijing Karbon Faces Scrutiny

The investigation also points to Beijing Karbon, a Chinese consultancy involved in many of the projects. According to the German report, Beijing Karbon was the main developer behind the 45 projects under investigation.  The report alleges that the company created the appearance of legitimate UER projects through deception. The case also raises questions about third-party verification.

Germany Tightens the Rules After the Credit Scandal

The scandal has already changed Germany’s approach to these credits. In 2024, UBA found that remote checks, satellite images, and document reviews often didn’t fully catch misuse. The agency brought in an international law firm to support its investigations in China.  The agency also said it would continue reviewing other critical UER projects worldwide.

The German government has since moved to end the use of UER certificates for the country’s fuel emissions quota. Under the updated rules, recognition of these certificates was allowed only through 2025. That makes the current revocations part of a broader shift away from the system.