Climate fraud: Industry alliance launches sharp attacks on the Ministry of the Environment

Demand for electric cars has collapsed, the mood in the auto industry is at rock bottom, and Volkswagen is threatening to close its plants for the first time: a newly founded initiative by the biofuel and electric car industry is now accusing the Green-led Federal Environment Ministry of at least partly being to blame.

The officials of Environment Minister Steffi Lemke (Greens) in the ministry and the Federal Environment Agency (UBA) had stood by and watched the ongoing fraud with adulterated biodiesel imports from China and fake climate projects there for too long and continued to do too little to put an end to the abuses, criticized the Berlin-based industry initiative “Stop Climate Fraud” (IKS).

40 companies from the electromobility and biofuel industries have joined the groups. Ten industry associations have also joined the IKS.

The initiative sees the fraud as a reason for the fall in prices for so-called greenhouse gas quotas (GHG quotas). GHG quotas provide oil companies with evidence that they are spending money on CO₂-saving measures, electromobility and clean fuels. The taxes, the costs of which are passed on to non-electric drivers at the gas station, are considered the most important climate protection instrument in the transport sector.

Due to fake biofuel from China and fake climate certificates, the value of GHG quota certificates has plummeted by more than 80 percent in just a few months. As a result, dozens of investment projects in the e-mobility, hydrogen and biofuel industries in Germany have already been stopped, says the IKS spokesperson.

In 2022, owners of electric cars were able to earn around 400 euros by selling their quota contribution. Today, it is only 80 euros per year. Municipal utilities recently received a bonus of 16,000 euros for the purchase of an electric bus through the GHG quota; today, the maximum is 3,000 euros.

“Nobody is buying an electric vehicle for that anymore,” said Marc Schubert from the Federal Association of GHGs. “The price collapse makes measures such as expanding the electric charging infrastructure, promoting green hydrogen or adding advanced biofuels less attractive and endangers the renewable drive industry in Germany – and thus the fulfillment of climate protection goals.”

The IKS founders, including the biofuel manufacturer Verbio and the Capital Office for Bioenergy, calculate that the fall in quota prices has resulted in a capital outflow of 4.4 billion euros to the fossil fuel industry. In addition, the state will have lost 1.3 billion euros in taxes.

The damage caused by the climate fraud is many times greater than that of the prominent Wirecard scandal, which “only” resulted in damage of 1.9 billion euros. The “fraud network” involving fake Chinese certificates resulted in 8.8 million tons of CO₂ reductions being paid for, but de facto not fulfilled.

Ministry of the Environment “cannot estimate” damage

The Federal Environment Ministry considers the information to be published. “We cannot confirm or verify the euro amounts mentioned in various places,” it says on the ministry's website. It is not yet known “how many projects were actually certified incorrectly – so the damage caused cannot be estimated.” The ministry also claims that even fake GHG certificates make “the ghost” at the gas station “cheaper, not more expensive.”

Sandra Rostek, head of the capital's bioenergy office, called the ministry's argument “completely absurd”. It was “absurd for the ministry to gloss over fraudulent actions in this way towards all honest market players,” said Rostek. “And the bill is still outstanding, because it is clear that the lost climate protection must be made up for.”

The Ministry of the Environment points out that the recognition of UER projects was “immediately terminated” on July 1 of the following year, nine months after the first suspected cases became known. Now “we are examining how the GHG quota can be adjusted in a targeted manner and fraud prevention can be improved.”

However, the industry initiative doubts the willingness to provide information. Identical forms were submitted for two allegedly failed climate protection projects in China, which are 1,800 kilometers apart – without this being noticed.

Operators of long-established plants had “let the money from Germany make their operations even more profitable,” explained Rostek. At least the fact that one of the project participants “operates a karaoke bar in North Rhine-Westphalia should have prompted the Federal Environment Agency to inquire.” According to research by the industry, 68 of 69 projects are questionable, and not just “a few,” as the ministry communicates.

Meanwhile, it has been announced that the oil company Rosneft Germany is the only company to date to have waived the offsetting of two dubious projects on “Upstream Emission Reductions” (UER). According to reports, this entails a loss of 55 million euros for a quota price of 100 euros. Rosneft Germany is owned by the Russian energy multinational Rosneft, but is managed in trust by the Federal Network Agency.

Daniel Wetzel is a business editor in Berlin. He reports on Energy industry, Energy policy, Climate policy and Tourism industry.