In order to estimate expected emission reductions, the emissions that would be associated with the project itself must be determined. Then a scenario must be established that describes what would happen without the project. This scenario is called a baseline. The difference between baseline emissions (reference case emissions) and the expected emissions of the project (including leakage) is the expected emission reduction.

In CDM, project participants are given the choice between two types of crediting period. Once the choice is made, it cannot be altered:

• The crediting period can be set at seven years with the option of extending the period twice - in other words, a maximum of 21 years.
• Alternatively, the crediting period can be set at ten years with no extension option.

The actual volume of emission reductions will be established later during the monitoring process. It is therefore possible that emissions credited lie below the anticipated volume if project activities do not yield the expected reduction in emissions.

The number of emission reduction units is calculated from the difference between baseline and project emissions (in tonnes of carbon dioxide equivalents - CO2eq), adjusted by leakage emissions.

Please note that leakage may have a positive impact and is not necessarily a debit factor.

Calculation:

Baseline emissions

+/- leakage

- project emissions

= Certified Emission Reductions (CERs)

The certificates are issued after completion of monitoring and the surrender of the verification and certification reports.

A CDM project can be directed towards reducing one or several of the following greenhouse gases listed in the Kyoto Protocol: Carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulphur hexafluoride (SF6).

As their individual contributions to the greenhouse effect vary, they are weighted according to their global-warming potential, which is defined as the amount of heat trapped by a certain mass of the gas in question compared to the amount of heat trapped by a similar mass of carbon dioxide.

All gases are therefore measured in tonnes of carbon dioxide equivalents (tCO2eq).

Thus, 1 tonne of CH4 would equal 21 tCO2eq.

UER (Upstream Emission Reductions) are greenhouse gas emission reductions occurring prior to the raw materials for petrol, diesel and LPG fuel entering a refinery or a storage facility. They include, for example, emission reductions achieved by avoiding the flaring of associated gases in crude oil production.

UER certificates are certified upstream emission reductions attained by an UER project, that has been approved by the German Environmental Agency.Companies that commercially market or store fossil fuels in Germany and are subjects to taxation under the Energy Tax Act must comply to greenhouse gas reduction quotas based on EU law. Companies marketing liquid fuels in Germany are legally obliged to reduce the greenhouse gas emissions of these fuels. This obligation is based on the EU Fuel Quality Directive (EU) 2015/1513. Obligated parties can meet up to 1.2 percentage points of their quota by UER certificates from 2020 onwards. The Biokraftstoffquotenstelle (biofuel quota body) reviews the calculation of the quota and supervises the compliance with the obligations.

A compliance year corresponds to one calendar year. It refers to the statutory obligation to reduce greenhouse gas emissions for fuel supplies. UER certificates may be offset against this obligation beginning with the compliance year 2020. UER certificates can only be offset for the compliance year in which they were attained. Obliged parties must transfer UER certificates for UERs attained in a given compliance year (for example 2020) to the depreciation account of the Biofuel Quota Body by 15.04. of the following year (2021 in this example) to meet the greenhouse gas reduction quota within the relevant compliance year (2020 in this example).

Please note that obliged parties must report how they meet the greenhouse gas reduction quota for a compliance year according 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.

The UER registry is a database identifying holders of UER certificates. Account holders may check their balance and transfer UER certificates. UER certificates are issued within the UER registry. You may find the UER registry here. Access to the UER registry will be granted upon request to lead partners of UER projects and subjects to the greenhouse gas quota. 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.

The lead partner of the project must submit an application for approval to UBA before the start of project implementation. This means that the planning phase of the project may have been completed, but the concrete implementation (especially the construction phase) may not have started before approval. The project application must include the project documentation and a validation report. This report must be prepared by a validation body that is registered as a validation body with UBA at the time the validation report is finalised. Further requirements for a project application are regulated in Section 7(2) UERV. Once all the necessary documents have been submitted in full, UBA will decide on the application within two months.

Project activities that reduce emissions from installations that are subject to European emissions trading or that are located within Germany and have been financed with public funding are excluded and therefore not eligible for approval.

The duration of the offsetting period per project is twelve months. The offsetting period can cross two compliance years (calendar years). An UER project cannot claim multiple offsetting periods or reapply for approval a second time. Within the request for approval the start of the offsetting period is set preliminary. After the German Environmental Agency has approved the project, the lead partner of the project determines the beginning of the offsetting period. This determination is binding. It cannot be changed and will be published on this website. The earliest start of the offsetting period is one day after the German Environmental Agency has received the relevant notification by the lead partner of the project.

A request for approval or clearance to issue UER certificates must be submitted formally to the German Environmental Agency. It has to be send by mail, fax or via e-mail accompanied by a qualified electronic signature. If the applicant has access to the Virtual Post Office (VPS) of the German Environmental Agency, it may be used, too. This formality only applies to the completed and signed application form, supplementary documents can also be submitted by email.

• CER generated by a CDM project can be converted into UER certificates if they meet the following conditions:The lead partner of the project has submitted a request for approval under the ordinance to the German Environment Agency (UBA) before the project has started. The project may be already registered with the UNFCCC as a CDM project. However the project must not be implemented yet (in particular the construction phase must not have started).
• The project takes place in the upstream area of fuel production.
• The project has been approved according to the UERV by UBA; at this stage the project activity may have been started already.
• CER generated by such a project activity may only be converted to UER proofs, if they were issued for upstream emission reductions attained in the compliance year 2020.
• In order to convert CERs into UER certificates, the CERs must have been cancelled in an account in the German Kyoto registry.

As regards project activities implemented pursuant to the Kyoto Protocol, at the request of the lead partner, the German Environment Agency may grant derogations from the requirements under the UER ordinance if proof was furnished by other means that the requirements are satisfied. Hence a project design document validated under the UNFCCC regulations might be considered as proof that the some requirements concerning the project design document under the UER ordinance are met. However, any exceptions will be subject to the review of the individual case based on a proper justification given by the applicant.

UER certificates, issued under the UERV, may be used in other Member States of the European Union according to the respective national legislation. Designated authorities of other EU Member States may open a retirement account in the German UER registry (currently under construction). They have reading and editing access to these retirement accounts. Account holders (lead partners of projects and parties obligated under the greenhouse gas reduction quota) can transfer UER certificates to these retirement accounts where they are stored permanently. Retransfers are not possible. The UER certificates may be used in the respective Member State according to the legislation of this State. The UERV does not provide the possibility to transfer UER certificates issued abroad into the German registry.

The bank guarantee in accordance with sec. 14 UERV must be written in German. As minimal requirements, it must contain the clauses and information provided below in German. Below you may find additional information in English.

• The guarantee document must be signed, dated and written in German.
• The guarantee document must be sent by post to the following address:

German Emissions Trading Authority in the Federal Environment Agency
Division V
City Campus
Haus 3, Eingang 3A
Buchholzweg 8
13627 Berlin

• The guarantee document must be titled with the term "Sicherheitsleistung" or "Bankbürgschaft".
• The guarantee document must contain the following information:

1. Bürgendes Kreditinstitut (Bürge)
   Name und Anschrift
   Das bürgende Kreditinstitut benennt seinen angemeldeten Sitz in der Europäischen Union oder in einem Vertragsstaat des Abkommens über den Europäischen Wirtschaftsraum (Name und Anschrift).
2. Person des Begünstigten
   Bundesrepublik Deutschland, vertreten durch das Bundesministerium für Umwelt, Naturschutz, nukleare Sicherheit und Verbraucherschutz, dieses vertreten durch den Präsidenten des Umweltbundesamtes, Wörlitzer Platz 1, 06844 Dessau-Roßlau
   Zahlungsempfänger ist die Bundeskasse Halle.
3. Person des Projektträgers
   Name und Anschrift
4. Beschreibung des Grundgeschäfts
   Das Umweltbundesamt hat am (tt/mm/jjjj) dem Antrag auf Zustimmung zu der Projekttätigkeit (Name der Projekttätigkeit) gemäß § 10 der Verordnung zur Anrechnung von Upstream-Emissionsminderungen auf die Treibhausgasquote (UERV) zugestimmt (Aktenzeichen 18710-XXXX). Die gegenständliche Sicherheitsleistung dient dazu, die Erfüllung der Verpflichtung des Projektträgers nach § 24 Absatz 3 Satz 1 UERV sicherzustellen.
5. Bürgschaftsverpflichtung
   Der Bürge übernimmt gegenüber dem Begünstigten die unbefristete selbstschuldnerische Bürgschaft nach deutschem Recht in voller Höhe von (Betragshöhe wird bereits im Zustimmungsbescheid zur Projekttätigkeit festgesetzt).
   Der Bürge verzichtet auf die Einrede der Vorausklage (§ 771 BGB).
   Der Bürge kann nur auf Zahlung in Geld innerhalb von zwei Wochen an die Bundeskasse Halle in Anspruch genommen werden, gegen die schriftliche Erklärung des Begünstigten, dass der Projektträger seiner Pflicht nach § 24 Abs. 3 Satz 1 UERV nicht nachgekommen ist.
   Die Bürgschaft ist unbefristet; sie erlischt mit der Rückgabe dieser Bürgschaftsurkunde an den Bürgen.
6. Gerichtsstand und anwendbares Recht
   Der Gerichtsstand ist Berlin.
   Anwendbar ist deutsches Recht.

The following information on the bank guarantee is neither a literal nor an exhaustive translation of the clauses stated above. All legal specifications are stated in German.

• The document of the bank guarantee must be written in German. It must be signed by an authorized person and state the date of the signature.
• The document of the bank guarantee must be sent by mail to the German Emissions Trading Authority at the German Environment Agency in Berlin, Germany.
• The financial institute must state, where its head office within the European Union or in a Signatory State to the Agreement on the European Economic Area is situated.
• The bank guarantee needs to name, the beneficiary of the bank guarantee as stated in No. 2.
• The bank guarantee needs to state the relevant UER project activity as stated in No. 3.
• The bank guarantee needs to describe the underlying obligation as stated in No. 4. Within the brackets the date of the approval of the project activity, the name of the project activity and the reference number assigned to the approval of the project activity needs to be individualized with the regard to the project activity.
• The bank guarantee needs to state the relevant obligations according to German legislation as stated in No. 5.
• The bank guarantee needs to state the circumstances, when and how it may be collected as stated in No. 5 (It will be collected once the lead partner to the UER-project does not comply with his obligations in accordance with Sec. 24 (3) 1 UERV. There will be a written declaration to that fact sent to the financial institution against which it will pay the specified amount within two weeks).
• The bank guarantee must be provided for an unlimited period of time. The bank guarantee will be released by sending the document of the bank guarantee back to the financial institution.
• As stated in No. 6 legal venue is Berlin and German law is applicable.

The bank guarantee must be received by us at the latest with the first application for clearance of the issuance of UER certificates.

The bank guarantee will be released if it is ensured that there are not too many UER certificates in the registry due to errors in the verification reports. The review is carried out in several stages.

1. We will review all verification reports of a project activity for completeness and correctness. This review may take up to one year after the offsetting period’s end. If we come to the conclusion that the verification report is free of errors and the issued quantity of UER certificates is correct, we will release the bank guarantee.
   However, if it becomes clear that too many UER certificates have been issued due to errors in the verification report, review stage two will follow. The same applies if we find that, contrary to the statement of the lead partner of the project, the upstream emission reductions have been claimed in another Member State of the European Union.
2. We declare to the lead partner of the project the extent to which the information pertaining to the level of upstream emission reduction is inaccurate .We then correct or delete the UER certificates in the account of the lead partner of the project according to the inaccuracy found. If the error could be fully corrected, we will release the bank guarantee.
   UER certificates that have already been transferred to another account remain valid. They will neither be corrected nor deleted.
   If an adequate number of valid UER certificates are not available in the lead partner’s account to make the necessary corrections and deletions, review stage three will follow.
3. We oblige the lead partner of the project to transfer an appropriate number of UER certificates to their account for subsequent deletion within a reasonable period of time. If the lead partner of the project complies with this request in due time, we will release the bank guarantee.
   If the lead partner of the project does not comply with this request in due time, we will collect the bank guarantee.

We will give clearance to issue UER certificates within four weeks, once we have received the following documents:

1. Form to issue UER certificates within the UER registry
2. Submission of the verification report and the relevant monitoring report
3. Submission of the Guarantee Document

Please note that the four-week period does not begin until all the necessary documents have been submitted as required.

Additional Information:

1. Form to issue UER certificates within the UER registry
   Lead Partners of a project activity may submit the form to issue UER certificates within their account in the UER registry. In particular, the amount of upstream emission reductions attained and the verification period must be specified. Furthermore, the declarations provided for in § 19 (2) UERV must be submitted. This information is recorded electronically within the UER registry.
2. Submission of the verification report and the relevant monitoring report
   The verification report and the underlying monitoring report must be submitted to us by the verification body. The verification report must contain a written confirmation that the project activity has resulted in the verified upstream emission reductions within the verification period.
   Regarding emission reductions attained in 2021 the verification body must confirm to us that these reductions are not offset simultaneously against the nationally defined contributions that have been assumed by the host state or by third countries in accordance with the Paris Agreement.
   The reports can be sent to us via VPS. Please use the message type “UERV verification report”. The message must be sent with a qualified electronic signature. Further information can be found on the pages linked below.
   Alternatively, the verification opinion with a clear reference to the verification report can also be signed by hand by Verification Body as a separate document and sent to us by fax or mail (post). The two reports can then be sent by simple email to E-mail: uerv-info@uba.de.
3. Submission of the Guarantee Document
   In addition, the guarantee must be furnished in accordance with § 14 UERV. Only when the signed original document of the bank guarantee has been received by us we will give clearance for the issuance of UER certificates. The guarantee document must be sent by post to the following address:
   
   
   German Environment Agency
   German Emissions Trading Authority (DEHSt)
   City Campus - Building 3, Entrance 3A
   Buchholzweg 8
   13627 Berlin
   Germany
   
   You will find further information on the linked pages regarding the minimum requirements for guarantee as well as regarding to the questions when it will be returned and when it will be collected.

Access to the UER registry will be granted upon request to lead partners of UER projects and subjects to the greenhouse gas quota. 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.

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:

1. A legally signed Account Opening Application (form will be generated by the registry).
2. A certified excerpt from a public register (e.g. trade register) or equivalent document (not older than three months), confirming the company's name and address; regulations regarding the representation of the company and the names of individuals who are authorized to represent and to sign for the company.
3. A certified list of directors and evidence to support the registered address of the account holder in case the document mentioned above under point 2) does not contain such information.
4. Criminal record certificates (or equivalent documents) of the person(s) who is (are) authorized to represent the account holder and who signed the Account Opening Application. If there are more than one director available in the company at least two need to be included in the account application.
5. Certified copy of ID card or passport for each Account Representative (AR). ID and Passports should contain the permanent address of the AR.
6. A confirmation of VAT Registration.
   
   

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 euros.

One of the AR needs to be a permanent resident in Germany.

For upstream emission reductions (UER) attained beginning 2021 within an UER project activity, UER certificates may only be issued, once the verification body has confirmed to us that these UER are not offset simultaneously against nationally determined contributions (NDC) that have been assumed by the host state or by third countries in accordance with the Paris Agreement. This requirement is stated in sec. 19 (2) No. 5 of the Upstream Emission Reduction Ordinance.

To demonstrate that no double counting as stated above will occur, the lead partner could provide a confirmation by the host country, that no double counting will occur to the verification body. This confirmation (“letter of intent”) needs to be signed by the competent body of the host country, which has to be confirmed by the verification body, and fulfill the following minimal requirements:

• Unique identification of the project activity (name, project site by longitude and latitude, lead partner, methodology)
• Offsetting period
• Ex ante estimate of UER to be attained by the project activity during the offsetting period of the project activity as confirmed by the validation body
• Confirmation that emission reduction in the respective amount will not be counted towards the NDC of the host country and will not be transferred to another state for that purpose
• Confirmation that emission reductions attained by the project activity during the offsetting period will not be approved for any other use (e.g. under CORSIA or the for the voluntary market)
• Confirmation that all current and future requirements under the UNFCCC and the Paris Agreement will be observed regarding reporting, transparency and accounting

Please be advised that the said requirements will be amended with respect to the ongoing negotiations of the Parties to the Paris Agreements, especially regarding Art. 6.

The Letter of Intent must be submitted to us as an addendum to the first verification report concerning UER attained in 2021.

Please be advised that confirmation of the avoidance of double counting as per § 19 II Nr. 5 is not a requirement for the approval of a project activity and is will not be reviewed within the approval process. Therefore, the approval does not contain any confirmation or assurance that the requirements as per § 19 II Nr. 5 UERV are met. The confirmation of the avoidance of double counting is a requirement for the issuance of UER certificates. If the verification body cannot confirm within the verification report that there will be no double counting regarding UER attained in the project activity or such a confirmation by the verification body lacks a sufficient basis, no UER certificates may be issued even if we have approved the project activity.