Amendment to Germany’s GHG quota act sets precedent for fraud prevention

Germany-based Union for the Promotion of Oil and Protein Plants (UFOP) welcomed Jan. 28 measures to tighten fraud prevention provided for in a draft bill on the further development of the country’s greenhouse-gas (GHG) reduction quota.

These include, in particular, the abolition of double counting and the requirement for on-site inspections by the competent authority.

If confirmation of such an audit is not provided, or if an on-site inspection confirms a suspicion of fraud, these biofuel quantities cannot be counted towards the GHG quota obligation in accordance with the draft law.

The associated sustainability certificate is practically worthless, UFOP stated.

UFOP expects that the stricter requirements will prompt companies in the mineral-oil industry that are subject to quotas to scrutinize their sources of supply even more closely than before.

These measures are not least a result of the refusal of Chinese biofuel producers to investigate suspected fraud, according to UFOP.

UFOP said it expects a corresponding corrective effect, which is also necessary in order to restore product confidence among end customers and politicians as a result of the suspected cases that have become known in the EU and third countries.

The necessity of this is confirmed once again, according to UFOP, by a recent suspicion of fraud in Malaysia involving mislabelled waste oil from palm oil.

UFOP therefore welcomes the end of the crediting of biofuels from residues from palm oil production, as provided for in the law, because “the temptation is great and on-site control is difficult.” 

UFOP called on the German government to advocate for similar regulations at the EU level, as member states are currently in the process of implementing RED III.

In this context, UFOP is critical of the expansion of Annex IX Parts A and B of RED II to include raw materials from so-called intercropping.

This is because the relevant EU regulation stipulates that member states regulate the verification requirements.

From UFOP’s point of view, this threatens to create a patchwork of regulations.

In order to prevent circumvention, the UFOP emphasized the need for coordination among member states in the interests of EU-wide fraud prevention.

UFOP highlighted the importance of fraud prevention in the development of the raw-material composition for biodiesel and renewable diesel.

According to Germany’s Federal Office for Agriculture and Food (BLE), a total of 3.6 million metric tons (3.9 million tons the previous year) of biofuels were placed on the market in 2024 for crediting towards the GHG reduction obligation.

Of this, approximately 2.075 million tons were diesel-replacing biofuels (biodiesel, renewable diesel), with waste oils and fats accounting for 82 percent of biofuels.