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Companies that are subject to the greenhouse gas quota in Germany can partially fulfil their obligation since 2020 with upstream emission reductions (Upstream Emissionsminderung (UER)) up until 2025 (compliance year).
Source: © Leonid Ikan / Fotolia
The German Environment Agency has received indications that irregularities have occurred in UER projects that are being or have been carried out in China. The German Environment Agency takes these indications seriously and initiates formal investigations in accordance with the UER if the indications are substantiated or can be substantiated.
If the reviews reveal that the approval requirements for a project activity were not or are not met, the project is terminated. No more UER certificates can be issued for emission reductions from the project activity. If UER certificates have already been issued for the project activity in question, the corresponding amount of UER certificates will be deleted from the project sponsor's account. If the account of the project sponsor is not sufficiently funded, the security deposit will be utilised. Approval of the project activity is withdrawn.
If the tests and inspections show that the testing bodies have not performed their tasks in accordance with the standards on which their accreditation is based, a complaint is lodged with the supervisory body of the testing bodies, the German Accreditation Body (DAkkS). In the event of repeated or serious violations, the German Environment Agency can submit an application to the DAkkS to review the accreditation, revoke the registration of the testing body under the UERV or exclude individual testing personnel from further testing.
The German Environment Agency has filed a criminal complaint against unknown persons for all possible offences, informing the public prosecutor's office in Berlin of the known facts.
Companies marketing liquid fuels in Germany are subject to the statutory obligation to reduce the greenhouse gas emissions of these fuels, 37a(1) and (4) of the Federal Immission Control Act (BImSchG). The biofuel quota office (Hauptzollamt Frankfurt/Oder) checks compliance with the reduction obligation.
Since 2020, it is possible to offset upstream emission reductions against their obligation by surrendering UER-certificates. UER certificates are certified upstream emission reductions achieved in climate protection projects in the upstream oil and gas production sector (“UER projects”).
This compliance option is regulated in the Ordinance on the Offsetting of UER against the Greenhouse Gas Quota (UERV). Upon application to the German Environment Agency, a climate protection project can receive approval as an UER-project under precisely regulated conditions and issue UER certificates for the emission reductions achieved if the project and the emission reductions have been reviewed and confirmed by accredited validation and verification bodies.
Following the amendment to the UERV of 08/06/2024, this possibility of offsetting ends with the compliance year 2025. Project applications whose application documents have not been submitted in full to the German Environment Agency by 01/07/2024 will be rejected. The amendment also tightens the requirements that validations and verification bodies must observe when reviewing and confirming projects and emission reductions.
11/06/2024
The Ordinance offsetting upstream emission reductions against the greenhouse gas quota (Upstream Emission Reduction Ordinance, UERV) regulates the offsetting of upstream emission reductions (UERs). Information on the greenhouse gas reduction quota and the amount and duration of the offsetting options can be found under "General information".
UERs are greenhouse gas emission reductions that take place before the raw materials for petrol, diesel and LPG fuels enter a refinery or storage facility. These include emission reductions attained by avoiding flaring of associated gases in crude oil production.
Emission reductions must be attained by a project activity approved by ourselves in order for UERs to be offset. UER certificates are issued in the UER Registry for verified UERs and may be used to meet part of the greenhouse gas quota. UER certificates can be transferred between lead partners of projects and obligated parties.
21/06/2023
UER project activities pass several steps:
The lead partner of the project identifies and plans a project activity to reduce upstream emissions. They do not have to be subject to the greenhouse gas reduction quota themselves.
A project activity must always be based on a methodology recognised by the United Nations Framework Convention on Climate Change for CDM projects.
Natural gas is one of the refinery feedstocks in the sense of Section 2(2) and (5) of UERV. This applies not only if natural gas occurs as an associated gas in oil production, but also to project activities that relate exclusively to natural gas production. Accordingly, upstream emission reduction project activities related to natural gas production fall within the scope of the Upstream Emission Reduction Regulation provided they can be assigned to the upstream sector. For gas production projects, the upstream sector ends prior to the vital natural gas processing step before being delivered to the end customer. Whether a project can be assigned to the upstream sector therefore depends principally on which processing steps still take place after the crucial processing step. Simply passing gas through a compressor cannot normally be regarded as a crucial processing step. It should also be noted that there is currently no methodology recognised by the United Nations Framework Convention on Climate Change for CDM projects that can be applied to natural gas.
Please note that the methodology AM0009 Version 7.0 is not considered to be applicable for activities that have liquefied natural gas (LNG) as an outcome, in accordance with the clarification note AM_CLA_0293. We will not be able to evaluate or approve any significant deviations from the CDM-approved methodologies. Therefore, we do not consider these projects approvable under the UERV.
We recommend withdrawing such applications. After a revision to AM0009, an application for approval can be submitted for new projects that fall within the scope of this methodology.
The lead partner of the project prepares a project design document in which they describe their project activity. Please note that the template has been updated in December 2022 and make sure to use the current version.
The project design document has to be reviewed by a validation body which prepares a validation report on its findings. The Validation Body must be accredited according to DIN EN ISO 14065 for the areas of DIN EN ISO 14064-2 and DIN ISO 14064-3 at the time when the validation report is completed. The validation is carried out in accordance with the regulations of the Upstream Emission Reduction Ordinance (UERV), plus DIN EN ISO 14064, DIN EN ISO 14065 and ISO 14066.
The lead partner of the project submits an application for approval of their project activity. The submission must be done before starting the project. Please note that although the planning phase of the project may have been completed, its concrete implementation (especially the construction phase) must not have started before the application is submitted.
The application for approval includes the following:
The application must be submitted in writing by mail, fax, email with a qualified electronic signature or via the Virtual Post Office (VPS). This formality only applies to the completed and signed application form, supplementary documents can also be submitted by email.
The application for approval is regarded as formally submitted as soon as we have received the completed and signed application form using one of the said ways of communication. After this formal submission the implementation of the project may be started at the discretion and responsibility of the lead partner of the project, even though the application is not yet completed and approval is pending.
We will decide on the project application within two months of receipt of the completed application documents. The approval will contain
Since upstream emission reduction certificates (UER certificates) are issued prior to the review of the verification reports, the lead partner of the project must provide a guarantee that all upstream emission reductions specified have actually been attained. The guarantee must be furnished in the form of an absolute bank guarantee from a financial institution. The financial institution must have its headquarters in the European Union or in a Signatory State to the Agreement on the European Economic Area. Clearance to issue UER certificates can only be given, after the guarantee has been submitted to us (see step 8).
After approval, we will publish:
If the lead partner of the project have given their consent in the application form, we will also publish:
Please note that the exclusion of double counting pursuant to Section 19(2)(5) UERV is not a prerequisite for the approval of a project activity and is therefore not examined in the approval procedure. The approval therefore does not include any confirmation or assurance that the requirement of Section 19(2)(5) is met. Rather, this requirement is a prerequisite for the option of issuing UER certificates. If the verifier cannot confirm in your verification report that double counting of emission reductions is excluded, or if the confirmation lacks a sufficient basis, no UER certificates can be issued, even if we have approved the project activity.
Insofar as a project activity does not fall within the UERV scope, it must be rejected. The ordinance is not applicable to
The lead partner of the project gives us information about the start of the offsetting period.
The offsetting period
We will publish the offsetting period.
The lead partner of the project monitors the project activity according to the specifications of the methodology used and the Upstream Emission Reduction Ordinance (UERV). Should the project activity or the monitoring system deviate from the documents underlying the approval, the lead partner shall notify us and the verification body of this forthwith. Substantial deviations (1o percent or more) in the amount of emission reductions attained (or foreseeable) during the offsetting period of the project activity with regard to the amount indicated as an estimate within the validated project documentation, must be notified as well. Deviations from the project documentation are addressed in Section 17 UERV.
The upstream emission reductions (UERs) attained by the project activity must be verified by a verification body. If the estimated UERs of the project activity exceed 60 kilotonnes of CO2 equivalent (CO2eq) per year, validation and verification must be performed by two different bodies. The Verification Body, having prepared a verification report on their findings, must be accredited at the time the verification report is completed (as described under 2.). Verification is carried out according to the regulations of the Upstream Emission Reduction Ordinance (UERV) and DIN EN ISO 14064-2.
According to Section 39 Paragraph 2 Sentence 1 UERV, an on-site inspection must be carried out for every verification. A complete verification with an on-site inspection must be carried out for each verification period. An on-site inspection can therefore only be the basis for the verification of one verification period and cannot substantiate the verification of several verification periods.
The verification body must choose an appropriate time for the on-site inspection. The German Environment Agency considers a time that is within four weeks before or after the end of the verification period to be appropriate. If an on-site inspection is carried out outside of this period, the verification body must explicitly justify why the chosen time was appropriate for an on-site inspection.
Within the UER Registry the lead partner of the project may issue certificates for verified upstream emission reductions (UERs) attained by the project activity. To do so, they need to submit the required documents to us. We give clearance to issue UER certificates within four weeks after receiving these documents. You may find the UER registry login below.
Since the UER certificates are issued prior to the complete review of the verification reports, the lead partner of the project must provide a guarantee that all upstream emission reductions specified have actually been attained. The guarantee must be furnished in the form of an absolute bank guarantee from a financial institution. The financial institution must have its headquarters in the European Union or in a Signatory State to the Agreement on the European Economic Area. Clearance to issue UER certificates can only be given, after the guarantee has been submitted to us.
The issuance of UER certificates for emission reductions attained from 2021 onwards can only be cleared if the Verification Body confirms us that there is no double counting. This means that these reductions are not simultaneously offset against the nationally determined emission reduction contributions under the Paris Agreement accepted by the host country or third countries.
To issue UER certificates the lead partner needs to submit the following documents:
We will give clearance to issue upstream emission reduction certificates (UER certificates) within four weeks of receipt of the completed application documents. Once the UER certificates have been issued, they can be transferred to other accounts. The obligated party must move UER certificates for UERs attained during the relevant compliance year (e.g. 2020) by 15/04/ of the following year (2021 in the example) to the depreciation account of the Biofuel Quota Office to meet the greenhouse gas reduction quota for a given compliance year (2021 in the example). Changes to this date are published on the Biofuel Quota Office website. DEHSt has no power to adjust the deadline.
Please note that obliged parties must report how they meet the greenhouse gas reduction quota for a compliance year pursuant to Section 37f of the Federal Immission Control Act and the 38th Federal Immission Control Ordinance. This reporting obligation also applies to UER certificates to be credited towards the quota within a compliance year (for example, 2020). The reports must be submitted by 31/03/ of the following year (2021 in this example). The data to be reported are saved in the UER certificates and can be viewed by their owners.
UER certificates can be used in intra-European foreign countries if they are transferred to a retirement account of the respective Member State.
We will publish the verification report.
We review the verification report in terms of its correctness and completeness within one year of the end of the offsetting period on the basis of the documents presented and, if necessary, on site.
We will amend all data and, if necessary, delete valid upstream emission reduction certificates (UER certificates) that are to be found in the lead partner’s account if the amount of verified UERs is inaccurate. UER certificates that have already been transferred to another account or that have been used to meet the greenhouse gas reduction quota will not become invalid. Only UER certificates in the lead partner’s account will be deleted to correct the amount of attained UERs. If there are not enough valid UER certificates in the lead partner’s account, the lead partner will be obliged to transfer an appropriate number of valid UER certificates to their account for subsequent deletion. If the lead partner fails to comply, the guarantee will be forfeit.
The guarantee will be released no later than one year after the end of the offsetting period if we have not objected to the issued UER certificates during the review phase. It will also be released if UER certificates have been found to be incorrect but other certificates could be deleted accordingly in the account of the lead partner of the project.
31/10/2023
Once we have approved a project, we will publish
If the lead partner of the project has expressed his consent in the application form, we will publish
We will publish the offsetting period of a project as soon as the lead partner of the project has told us in a binding manner.
We will publish a verification report, once we have given clearance to issue upstream emission reduction certificates.
UER certificates are issued and may be transferred within the UER registry. Upon submitting a request to us, lead partners of project activities as well as subjects to the greenhouse gas quota, may obtain access to the UER registry. Third parties will not be granted access to the registry. The Upstream Emission Reduction Ordinance does not allow for trading accounts as they are known within the EU ETS. Obligated parities may comply up to 1,2 percentage point of their quota using UER. To do so they must transfer the UER certificates into the depreciation account of the Biofuel Quota Body.
Request to open an account
The request to open an account in the UER Registry can be made directly in the Registry itself. You can find the registry via this link.
Instructions and assistance for the application process are currently being drafted and will subsequently be published on the website. Terms of use are also currently being drafted and will subsequently be published. However, you can already apply to open an account via the link provided.
Within the application process the following documents must be provided:
Copies of documents referred to in points 2. until 5. must be certified as a true copy. At the time of application, the certification must not be older than three months.
Please note that according to the Upstream-Emission-Reduction Ordinance (UERV) an account opening in the UER-Registry is subject to a fee of 170,- EUR.
One of the AR needs to be a permanent resident in Germany.
02/03/2021