The Green Gas Lie

German gas providers‘ claims about their “climate-neutral” natural gas are little more than greenwashing, CORRECTIV has revealed. The gas is linked to the deforestation of supposedly protected forests and the expansion of gas-fired power stations. We expose an industry deceiving hundreds of thousands of customers and fuelling the climate crisis.

von Stella Hesch, Gesa Steeger, Max Donheiser, Simon Wörpel

16. April 2024

Inhalt

Chapter 1: The Consumers

Climate-neutral gas – your contribution to protecting the environment. Heat your house with gas and in so doing reduce your environmental impact – that’s the promise made by many German energy providers. Customers have the option of paying a few cents more per kilowatt hour for a ‘green gas’ tariff, and in return can turn up the heating guilt-free. But it’s an empty promise. German gas providers such as Hesse’s Entega and public utility companies such as those of Duisburg and Rostock are offering a gas solution that’s only green on paper. CORRECTIV’s analysis of the gas tariffs and products of a total of 116 German gas providers over the last 13 years has shown them to be anything but climate neutral. 

The principle behind these so-called green gas tariffs is carbon offsetting, a type of carbon compensation. Greenhouse gas emissions produced in Germany, from central heating for example, are offset elsewhere, by protecting forests in Brazil or by building hydroelectric power plants in India for instance. Companies can then purchase these ‘saved’ emissions in the form of carbon credits in order to improve their carbon footprint. 

Large-scale deception of consumers

However, our research has shown that this offsetting often does little to benefit the environment. In many cases the opposite is true: many carbon offsetting schemes are actually further damaging the climate – the development of gas-fired power stations for example. By purchasing credits from such power stations in India, China and Singapore, German energy providers can market their gas tariffs as climate-friendly while simultaneously propping up the fossil fuel industry.

This was revealed by CORRECTIV’s investigations into the carbon offsetting and use of carbon credits by 150 German gas providers and public utility companies between 2011 and 2024. 

The analysis is based on the records of the two voluntary offsetting market leaders: Verra and Gold Standard. These two NGOs set global standards for the quality of carbon offsetting projects and carbon credits. They act as control bodies and guarantee that emissions are offset as promised. At least in theory. Their effectiveness is questionable. Verra in particular has been under public criticism for some time now. 

The evaluation was closely supervised by scientists and experts from several research institutes including the New Climate Institute, Berkeley University, the Institute for Applied Ecology (Öko-Institut) and Environmental Action Germany (Deutsche Umwelthilfe, DUH). 

The results? Over the past 13 years, 116 German gas providers have used carbon credits from climate protection projects which, according to scientific assessment, cannot provide plausible evidence that emissions have actually been reduced or offset. This applies to two thirds of the total 16 million credits analysed. 98 percent of these questionable carbon credits were issued by Verra. Flaws in the offsetting projects included examples such as a smaller area of forest being protected than stated, fewer emissions being offset than promised or the fact that the project could have been carried out without the income from the sale of carbon credits.  

The real number of such “phantom credits” is probably far higher, according biologist and offsetting expert Jutta Kill. There are “hardly any offsetting projects on the market that can plausibly prove that CO2 emissions have been permanently reduced or saved,” she says. Other experts have expressed similar views to CORRECTIV. A preliminary publication by the ETH Zurich and the University of Cambridge concludes that only 12 percent of the carbon credits currently available on the market will lead to any “real reduction in emissions”.

And the damage caused by these carbon credits can be quantified in the case of German gas providers. Contrary to their promises, around 10 million tonnes of carbon emissions were, in all probability, not reduced or offset over the last 13 years. That is equivalent to the German state of Thuringia’s entire carbon emissions from coal, gas and other primary energy sources in 2020 alone. 

In response to an enquiry from CORRECTIV, Verra issued the following statement: “As a non-profit organisation, Verra is committed to continuous innovation and draws on the latest and best scientific knowledge.” This knowledge determines their standards and methods and “ensures the highest level of integrity in climate projects”, they added. 

Gold Standard explained that the organisation does not support offsetting claims at product level “if they are not consistent with the performance of the company as a whole”. Furthermore, Gold Standard has advocated “moving away from the concept of carbon offsetting, in order to ensure the credibility of claims and the responsible use of carbon credits” for several years, they claimed. 

A dying industry fighting for survival

German gas providers’ green promises have misled customers – customers trying to do the right thing in the belief that their energy choice makes a difference, Monique Goyens, director of the European Consumer Organisation (BEUC) in Brussels, told CORRECTIV. “This is a dying industry fighting for survival and taking the population with it,” she said. It’s hindering genuine change and “that is unacceptable”.

This kind of greenwashing can damage the environment in more ways than one. A study by the University of Münster illustrates the effect that the perceived climate credentials of products can have on consumer behaviour. Many people see supporting carbon offsetting, via their gas provider for example, as a free ticket for “environmentally harmful behaviour”. The “mere idea of behaving in an environmentally friendly way” is enough to justify subsequent high carbon behaviour such as flying.  

Natural gas cannot be completely offset

Many scientists emphasise how misleading it is to market gas as climate-neutral in this way. “Genuine climate protection can only be achieved by moving away from fossil gas,” says Claudia Kemfert, energy expert and environmental economist at the German Institute for Economic Research (Deutsches Institut für Wirtschaftsforschung, DIW). In her estimation, the promotion of ‘climate-neutral’ gas is primarily an attempt by the gas industry to “retain their fossil fuel business models for longer”.

The narrative of climate-friendly gas is being propagated by, among others, the powerful lobby group BDEW, which represents the interests of the German energy industry. A brochure for customers promises that even “conventional natural gas can be made climate-neutral: through carbon offsetting (…) The gas then receives certification and is available in ‘green gas tariffs’, for example”.

It’s a claim that Kemfert absolutely refutes. “There is no such thing as truly climate-neutral gas, even if carbon emissions are offset. It’s impossible for gas to be emission-free.” According to Kemfert, it is the consumers who are the victims here: “Customers are under the false impression that the gas they are using is less harmful to the climate.”

According to a study conducted by the German Institute for Economic Research (DIW) in 2022, natural gas consists primarily of methane, a greenhouse gas that is around 28 to 34 times more harmful to the climate than carbon dioxide over a 100-year time frame. According to the DIW study, large quantities of carbon dioxide and volatile methane emissions are released when natural gas is burnt. Methane may also be released while the gas is extracted or transported.

Further experts contacted by CORRECTIV expressed similar opinions. The main reason for this scepticism is the time lag between the release of emissions and the effect of the offsetting. According to the German Environment Agency (Umweltbundesamt, UBA), it can take several hundred thousand years to completely remove fossil gas emissions from the atmosphere. Offsetting can therefore only compensate for a fraction of these emissions, and only in the short term – and that’s only true for genuine carbon offsets. This limited effect is non-existent in the high proportion of phantom offsets that our research has exposed.

A look towards India shows the consequences that these false promises made by the German gas industry can have, not only on the climate and hoodwinked customers, but also on the local people who become involuntarily caught up in these offsetting projects.

Chapter 2: The Project

The Himachal Pradesh region, situated in the far north of the country

lies the Karcham Wangtoo Dam between mountain peaks and deep gorges.

An 88-metre-high grey concrete block which divides the Satluj River into two parts. An upper and a lower one.

This hydropower plant and its dam were first connected to the grid in 2011. Since 2015, it has belonged to Indian energy giant JSW Energy.

Alongside energy the project produced another valuable commodity for many years: carbon credits. According to the project description, it offset 35 million tonnes of CO2 between 2011 and 2022 through its generation of renewable energy. This was subsequently sold in the form of carbon credits to buyers including German gas providers such as RheinEnergie AG and the public utility companies of Bayreuth and Rüsselsheim.

But whether the credits were ever more than mere hot air is doubtful.

As early as 2011, a study by scientists at the University of Heidelberg concluded that the hydropower station lacked so-called ‘additionality’ – a criteria that every offsetting project has to meet, even on the voluntary carbon market.

Revenues have no positive climate effect

In this case, the lack of additionality means that the hydropower station would have been built anyway, even without the additional income from the carbon credits.

In short: the revenue from the carbon credits had no positive effect on the climate.

When asked about this, Verra stated that they have since tightened their criteria for hydropower stations, meaning that these kinds of project can no longer be certified via Verra. However, offsetting projects that had been certified “before the new rules came into force” could continue to sell carbon credits until the end of the project term.

The devastating consequences that the Karcham Wangtoo Dam has had on the local population are undisputable.

Shaalu Negi, who lives near the dam, told Indian environmental activists and filmmakers in 2019 about how the dam had affected her community. In an interview she spoke of drought and water shortages. “When the dam was built, the water in the Satluj River disappeared.”

Some houses were destroyed during the construction of the dam. Source: Subrat Kumar Sahu

Other villagers reported how wells dried up, houses were destroyed by building work and grazing land was lost. 

And it wasn’t just these villagers who suffered under the fallout from the dam.

 

In recent decades, many hydropower projects have been built on the Satluj riverbed, says the Indian environmental activist and researcher Manshi Asher. “The consequences are serious and range from deforestation to deadly landslides and floods.”

 

Many of these projects are partially financed by the trade in carbon credits, according to Asher. The main beneficiaries of this trade are the companies involved: “The private sector has got involved in projects that have received money from the carbon market.” But it’s the local populations that suffer the environmental cost of these projects. 

 

First gas suppliers announce consequences

 

In 2023, Rhein Energie AG used over 5000 carbon credits from the Karcham Wangtoo project to offset emissions for its “Business-Green” gas tariff. When asked about the project’s lack of additionality and the situation in India, Rhein Energie simply replied that carbon offsetting was based on “certification according to strict criteria”.

In response to CORRECTIV’s findings, Rhein Energie has announced that it will now “demand specific project review procedures from the certifiers”. In addition, it has paused the Business-Green gas tariff and all further offsetting deals until the results of the review have come in. 

The Bayreuth public utility company has reported that it knew nothing about the study by the University of Heidelberg, nor about the damage done to the area. A spokesperson for the company informed CORRECTIV that the company would demand a review of the project by Verra. Until the results became available the company would be using “no further offsetting products” from the Karcham Wangtoo project. In 2020 the company used around 73,000 credits from the project in order to compensate its customers’ “combustion of natural gas”.

The Dormagen energy company, which used around 1000 credits from the project in 2023 and 2022, told us on request that the company was not informed about the project’s lack of additionality. 

The Rüsselsheim public utility company, which has also used credits from the Karcham Wangtoo project, did not respond to CORRECTIV’s enquiries.

Chapter 3: The Buyers

Rhein Energie and the public utility companies are not the only German gas providers whose green gas credentials turn out to be nothing but hot air. The Hessian gas company Entega has bought almost 1.5 million carbon credits over the past five years. CORRECTIV’s analysis has shown that these credits came from projects that, according to scientific assessment criteria, do not contribute towards genuine offsetting. There may be many more gas providers in the same situation, but as many buy their credits via third-party providers, it is almost impossible to track all their offsetting activities.

Our analysis shows that the carbon credits bought by Entega originate from seven forest conservation projects, six of which have been classified as inadequate, i.e. not suitable for offsetting. That means that there is no credible evidence that these projects reduced or offset any emissions. Just one of them has been cancelled by Verra. However, on its website Entega is still promoting the idea that its gas is ‘climate-friendly’: “We achieve this by offsetting all the carbon emissions caused by our green gas.”

Entega refused to disclose how many of their approximately 100,000 customers pay the extra for a green gas tariff with them. Other gas providers are also attempting to keep a low profile, especially when it comes to the question of how much more customers pay for their supposedly green gas option. Only around a tenth of the 116 companies we surveyed provided any concrete information on the matter. But it seems the prices for green gas vary considerably: while Energieversorgung Dormagen charges 0.54 cents more per kilowatt hour for its green gas, customers of the Zweibrücken public utility company pay 0.12 cent more.

Green gas: Entega wants to review its concept

In response to an enquiry from CORRECTIV, Entega stated that “the concept of the green gas tariff” is currently being reviewed by the company. However, further action has yet to be agreed upon.
At the time of the research, almost 70 percent of the 116 gas suppliers were offering ‘climate-neutral’ or ‘environmentally friendly’ gas. The public utility company Landshut, for example, promises to “improve your carbon footprint”, while the Berlin-based Gasag provider wants to help its customers “to achieve their personal climate targets – for example with our favourable tariffs for green electricity and green gas”.

Just how hollow these advertising promises actually are is illustrated particularly vividly by the case of a number of gas-fired power stations in India, China and Singapore, which are officially listed as climate protection projects on Verra’s offsetting registry and whose carbon credits appear in the portfolios of eight gas providers including Eswe and Eprimo GmbH from Hesse and Logo Energie, based in North Rhine-Westphalia.

Fossil-fuelled power stations to offset fossil fuel emissions… It’s an equation which obviously doesn’t work. “Fossil-fuelled projects are being funded that will pollute the climate with emissions for decades to come,” says Carsten Warnecke, co-founder of the New Climate Institute in Cologne and an expert on international carbon markets.

But gas providers are clearly not letting this stop them: almost a tenth of the total 10 million carbon credits that CORRECTIV found to be connected to dubious offsetting projects came from gas-fired power station projects.

Environmental responsibility lies with the gas suppliers

The energy giant Eon, to which Eprimo belongs, stated that in 2022 they defined an “internal minimum quality standard” that ensures “that the certificates used are of a high standard.” CORRECTIV’s investigations show that Eprimo used over 200,000 carbon credits from an Indian gas-fired power station project in 2022. The company declined to comment when asked whether Eprimo would continue to use credits from fossil fuel projects in the future.

The energy company Logo Energie, which has also bought credits from the Indian gas-fired power station project in the past, told CORRECTIV that it is taking this recent “project evaluation as an impetus” to contact the carbon credits provider. The gas provider Eswe and Rüsselsheim public utility company, which have also used credits from gas-fired power stations over the past 13 years, had not responded to CORRECTIV’s request for comment by the time of going to press.

Some companies attempt to shift the blame away from themselves. Rhein Energie AG, for example, considers organisations such as Verra and Gold Standard to be primarily responsible for ensuring that “promises about quality and quantity are met”. After all, they say, Rhein Energie “cannot send delegations to Africa or the Amazon to see the projects for themselves; that responsibility lies with the certifiers”.

It’s a view that Martin Bolm, a lawyer at Germany’s Centre for Protection against Unfair Competition (Wettbewerbszentrale), disagrees with: “If environmental credentials are advertised, then they must also be delivered. It’s the companies that are responsible for that.”

Chapter 4: The Market

The voluntary carbon market is a billion-dollar business. Although the prices for carbon credits have fallen in the past year, at the beginning of 2023 the Boston Consulting Group estimated the value of the voluntary offset market at two billion dollars in 2021.

 

The Kyoto Protocol came into force in 2005. The aim of the international agreement was to strengthen climate protection and to reduce climate-damaging emissions. The agreement led to, among other things, the creation of markets for the trading of emission rights, which were to be primarily regulated by the state. One example is the European Union’s emissions trading system. The voluntary carbon market developed simultaneously, where companies and individuals can buy carbon credits to offset their emissions.

It’s a business where everyone profits: the operators of the climate protection projects, the certifiers and standard regulators like Verra, Gold Standard and TÜV, and of course the end buyers of the carbon credits – in this case, the German gas providers. 

A system where everybody profits financially

Everyone is making money from the existing system, says Benedict Probst, a researcher at the Max Planck Institute for Innovation and Competition in Munich. “There is no incentive to issue fewer certificates.”

The result is an abundance of cheap carbon credits of dubious quality. According to a study by the New Climate Institute, “the surplus of cheap carbon credits, available for as little as two US dollars per tonne of offset CO2, discourages companies from implementing ambitious plans to reduce emissions within their own value chains.”

In other words, the voluntary carbon market, which was originally intended to protect the climate, is often preventing effective climate protection.

The market is flooded with meaningless certificates

This was not the case at the beginning, says Warnecke from the New Climate Institute. But by 2008 at the latest, after word got around that you could earn money with carbon offsetting, the market broke down and became “flooded with empty projects that should never have been given a stamp of approval”.

The operators of the offset registries, such as Verra and Gold Standard, are also responsible for this development, says Barbara Haya, Director of the Berkeley Carbon Trading Project at the Center for Environmental Public Policy at the University of Berkeley. “I blame Verra and Gold Standard most of all because they set the rules and create verification systems that fail to ensure quality.”

 

Our aim was to find out which German gas providers buy carbon credits, for what purpose, and from which offsetting projects these credits came from. To do this, we reviewed the databases of the four largest carbon credit registries: Gold Standard, Verra, Climate Action Reserve and the American Carbon Registry.

We used the German Federal Network Agency’s master market data in order to select the stakeholders in the gas market and any stakeholders that contained the word “Stadtwerk” (public utility company) in the title. The evaluation of the four registries (as of December 2023) showed that only Gold Standard and Verra were of interest for our research, as no German gas providers were listed in the the other two registries. Verra and Gold Standard’s databases cover over 90 percent of the German market.

Gold Standard and Verra also document what is offset with the respective carbon credits, so the specific gas tariffs that have been made ‘climate-neutral’ with the credits can be found in their entries. In the case of Verra, this information can be found in the “Details” column, and in the case of Gold Standard in the “Notes” column. In our analysis, we only included entries in which the word “gas” appeared in the project details/notes to ensure that we were analysing credits used for gas tariffs or gas products. Next we eliminated companies that are active as gas network operators.

The final data set contains 1,573 entries and includes information on 150 gas providers, 218 offsetting projects and around 16 million carbon credits. 70 of the offsetting projects have been evaluated for us by experts. These projects, and the over 10 million credits linked to them, have in all probability offset less carbon than promised or even none at all. We cannot make any statements about the remaining projects. Our discussions with experts give reason to believe that the real number of projects offsetting less or no carbon is likely to be significantly higher. We make no claim to completeness in our evaluation.

In response to enquiries from CORRECTIV, Verra stated that the organisation welcomed the “review of our methods and the contributions from other experts […] We stand by our methods, which are based on the best available scientific and technological knowledge.”

Gold Standard made a similar statement: “Gold Standard stands behind the integrity of its methods” which are based on the “latest scientific knowledge” and are “updated at least every three years to ensure that any new developments are taken into account”.

Chapter 5: Politics

The German government apparently sees no problem in any of this. Government departments use carbon credits themselves to reduce their own emissions, the Federal Ministry for Economic Affairs and Climate Action (Bundesministerium für Wirtschaft und Klimaschutz) confirmed to us.

The contradictory nature of the German government’s approach to carbon offsetting is also evident in its handling of the EU’s new “Directive to empower consumers for the green transition” which was approved by the EU Council on 20th February 2024. Among other things, misleading environmental claims that rely on offsetting will be banned under the new directive, which will come into force in EU countries in 2026.

More consumer protection: initial hesitation from Ministry for Climate Action

In response to questions from CORRECTIV, the Federal Ministry for Economic Affairs and Climate Action responded that Germany is firmly in favour of concrete regulations around the use of carbon credits, “which should lead to trust and clarity in the voluntary carbon market”. However, correspondence between the ministry and the NGO Foodwatch reveals that the ministry was initially reluctant to ban misleading environmental claims based on offsetting. A “substantiation of environmental claims”, i.e. providing more evidence for claims, would be preferable to a general ban, wrote State Secretary Sven Giegold in a letter made available to CORRECTIV. This would “enable competition for the best environmental protection schemes”.

The ministry declined to comment on the correspondence, but stated that it is important for the voluntary carbon market “to set qualitative specifications for the market infrastructure and its supply and demand, in order to create serious incentives for and trust in the market”.

For Jürgen Resch, Federal Managing Director of Environmental Action Germany, the lack of consumer protection is hardly surprising: “We have been waiting for 20 years for the responsible authorities to finally start consistently monitoring the environmental claims made by industry.” The new EU directive to combat greenwashing “undoubtedly represents significant progress”, he said.

This is a view shared by Anna Cavazzini, Green MEP and of the Chair of the Committee on the Internal Market and Consumer Protection. Misleading advertising will “come to an end in future”, Cavazzini told CORRECTIV. This directive applies to German gas providers too. “To be clear: there is no such thing as climate-neutral gas,” Cavazzini stated. Investments by gas companies in protection projects would still be welcome, however consumers shouldn’t be given the impression “that planting trees in the rainforest makes the production, transport or even the gas itself climate-neutral”.

Reducing consumption is the best way to protect the climate

So what’s left now offsetting is gone? How can environmentally-conscious people consume in a better way?
There are no simple solutions. But there are some starting points.

“It’s now all about complete decarbonisation,” says Martin Cames, a scientist at the German Institute for Applied Ecology (Öko-Institut) in Berlin. He points to what is known as “climate responsibility” – the idea that anyone who wants to actively contribute towards protecting the environment in order balance out their holidays or central heating should support environmental projects financially, but not via carbon credits.

However, the realistic price for a tonne of carbon dioxide within this framework is much higher than that on the voluntary offsetting market, says Cames. “At the moment it should cost 50 US dollars, by 2030 it will probably be 100 US dollars or more.”

In practice, this concept of climate responsibility would mean that the price of a flight from Frankfurt to Gran Canaria for two adults would be around $300. The higher costs could also encourage companies to “reduce their own emissions”, says Cames. Ultimately, “reducing consumption is best way to protect the climate”.
Solutions that seem too quick and easy to be true probably are. As nice as the idea of green gas sounds, in the end it’s nothing but hot air.

Credits

  • Text and research: Stella Hesch, Gesa Steeger, Max Donheiser, Simon Wörpel
  • Editors:Justus von Daniels, Annika Joeres
  • Faktencheck: Malina Dittrich, Alexej Hock
  • Design: Mohamed Anwar, Maximilian Bornmann
  • Database design and front-end development: Francesca Morini, Luc Guillemot
  • Frontend development: Philipp Waack
  • Communication: Esther Ecke, Valentin Zick, Elena Schipfer, Luise Lange-Letellier
  • Translation: Ella Norman