In 2023, the German company Verbio decided to invest in so-called emission certificates from China. The offer received was from the Chinese company "Beijing Carbon". The projects were approved by Verbio and everything is fine, China assures.
"The company seemed professional to us", says Stefan Schreiber from the board of directors of Verbio. His company produces biofuel and trades carbon credits.
Essentially, carbon certificates (or credits) are generated by projects that reduce or eliminate greenhouse gas emissions. To meet their climate goals, companies can either reduce emissions in their own production or operations, or buy these credits from others. These carbon credits can then be resold to other companies.
In 2023, Verbio acquired rights to carbon certificates from an oil field in China. It was approved as a carbon-saving project by German authorities. All Verbio’s management had to do was sign a contract and transfer the money for the carbon certificates.
A huge criminal scheme
The certificates are issued in Germany. The idea is that the money is intended to stimulate climate protection investments in oil and gas fields around the world. The German authority, the Federal Environment Agency, has already issued the license. The deal seems profitable for Schreiber. But the offer was too good to be true.
Investigation by "Deutsche Welle” and ZDF shows that the project under which Verbio received these carbon certificates is probably part of a fraudulent scheme. It probably generated carbon credits worth around 1 billion euros from its launch in 2020 until its suspension this year. Dozens of projects in China have been approved in Germany, even though they do not meet the legal requirements of the specialized carbon scheme created for the fossil fuel industry. In fact, only new installations can be allowed to receive carbon certificates - this is how Germany wants to ensure that additional climate protection is actually created.
Old projects are presented as new
However, we found many old installations that were presented as new climate protection projects. Among them is the project in which Verbio invested: a photo from 2019 shows that the plant had already been completed a year and a half before the climate protection project was submitted in Germany. "This plant should never have been approved. "It is not permissible for an installation to exist before the application is submitted," says certification expert Axel Mihaelova.
This is a pattern we find in many projects: An old power plant is presented as a new climate protection project. Most of the questionable projects seem to come from just one Chinese company: "Beijing Carbon" specializes in reducing emissions and trading certificates.
Its founder previously worked on energy issues in various management positions in the Chinese government and state-owned companies.
Due to a confidentiality clause, Schreiber cannot say exactly how much money he paid the Chinese company. Based on the documents, however, we estimate the value at 25 million euros.
Where are the inspectors from Germany?
"If it is a fraud, as we assume, there must have been people in Germany who knew this system inside out," he is convinced. Some industry representatives blame the inspection companies that inspected the plants according to the files. The Federal Environment Agency does not inspect the projects itself, but bases its assessment on the work of private German inspection companies. They work largely independently. Industry representatives even accuse these companies of working together on the fraud with the Chinese company.
We were unable to find any evidence of collusion. However, we found many signs that the inspection companies made serious mistakes. In one case, the plant documents certified six large gas storage facilities, although photographs and satellite images clearly show that there were only four. According to inspection reports, the company's inspectors were on site seven times. "I think it's unlikely that the inspectors were on site", concludes Aksel Mihaelova. "This is something that cannot be ignored."
The inspection companies in this case are highly reputable - Müller-BBM Cert, which specializes in environmental assessments, and Verico SCE - an even bigger name in the industry. For more than a decade, one of its board members has represented the interests of global inspection companies before UN bodies. Of the 66 projects from China, 48 were audited by at least one of the two companies. "This should be felt", says Mikhailova.
The companies deny
The companies reject the accusations. Verico SCE sees "no reason to doubt the quality of our expert activities or those of our auditors". And Müller-BBM Cert is "convinced that there is no criminal behavior on the part of our company's employees".
An investigation into the allegations of fraud has already been launched in Germany. The German Federal Environment Agency has frozen 45 projects and wants to withdraw as many certificates as possible. This will not be possible in all cases, as some projects have already been completed. New applications for participation in the program will no longer be accepted. The prosecutor's office has investigated the two testing companies. "Beijing Carbon” left all our inquiries unanswered.
Authors: Matthias Böllinger | Birgitta Schülke-Gill