European companies have bought at least 2.6 million carbon credits from oil and gas projects in China that failed to reduce greenhouse gas emissions.
A new investigation by Bloomberg reveals that the oil and gas project sites are supposed to capture greenhouse gases and prevent them entering the atmosphere. But the operations do not have the equipment needed to capture the gases.
Bloomberg journalists Petra Sorge and Natasha White explain how the process is supposed to work:
It’s a highly bureaucratic, but potentially lucrative, process. A project developer — either the facility owner, or someone else — files a proposal to a carbon-crediting program explaining how emissions will be cut and what equipment will be used. A third-party auditor verifies the site and the plan. Finally, the project can be registered, approved by authorities and implemented, then the developer can begin selling credits.
A verification report and EU data reveals that in 2023, almost 120,000 carbon offsets were registered with Austrian and Polish authorities generated from projects in China’s Changqing oilfield.
In November 2025, Bloomberg journalists visited some of the project sites listed in the documents. BloombergNEF also analysed drone footage and satellite images. “The projects did not appear to exist,” Sorge and White write. “One site was still under development and there was no sign of the equipment needed to trap emissions.”
The developer of the Changqing carbon offset project is Shaanxi LY Oil and Gas Service Co. In 2024, German TV station ZDF visited the company’s alleged address. It was an apartment. The woman living there knew nothing about the company. She had lived in that apartment for the previous 10 years.
Shaanxi LY did not respond to either ZDF’s or Bloomberg’s requests for comment.
Germany’s carbon offset scandal
In 2024, ZDF exposed a scandal about Chinese offset projects that sold fake carbon offsets into Europe’s government-run upstream emissions reduction (UER) scheme.
The CDU/CSU, Germany’s centre-right political party, stated that the fraud may have cost as much as €4.5 billion.
The German authorities found 45 carbon offset projects to be “suspicious”, to have exaggerated the number of carbon offsets generated, or to be non-existent. The authorities have withdrawn the carbon offsets from two-thirds of these projects.
The 30 withdrawn projects had generated 2.1 million carbon offsets.
None of the companies and individuals behind the projects are likely to face any legal consequences, Bloomberg reports. In January 2026, a fraud investigation into 17 employees at the European auditing firms was closed, due to lack of evidence. Sorge and White write that the auditing firms cannot be criminally prosecuted under German law:
A spokesperson for the German Environment Agency said its investigations had clearly found that some projects relied on incorrect documentation, failed to deliver the promised emissions reductions or were not properly validated and verified as required. They added that while the projects were unlawful under administrative law, this does not automatically imply criminal liability.
One of the Chinese projects, visited by ZDF journalist Miriam Steimer, turned out to be a disused chicken shed.
None of the corporations that bought the Chinese offsets face any penalty if the carbon offsets are determined to be fake. A spokesperson for Germany’s General Customs Directorate told Bloomberg that’s because the offsets were bought in good faith.
The Big Polluters that bought these carbon offsets include BP, Électricité de France, ExxonMobil, MB Energy, MOL Group, OMV AG, the German-controlled subsidiary of Rosneft, Shell, TotalEnergies, and Vitol.
Not just Germany
Bloomberg’s investigation reveals that Germany is just one of at least nine European countries where carbon offsets were bought from similarly problematic projects. The countries include Austria, Poland, Luxembourg, UK, Cyprus, Hungary, Estonia, and Italy. The projects sold almost 500,000 carbon offsets to these countries, in addition to those sold to Germany.
“But the total claimed by flawed projects may well be much higher,” Bloomberg notes.
The EU introduced the upstream emission reductions market in 2015. Under the scheme, companies could buy UER offsets from projects that reduce emissions from fossil-fuel extraction. Most of the 180 registered projects were in China. In 2022, 15 EU member states bought 5.9 million UER offsets.
Three German auditing firms audited many of the projects: TÜV Rheinland, Müller-BBM Cert, and Verico SCE. In 2024, German police raided the offices of all three firms as part of the fraud investigation.
Bloomberg reports that all three firms denied any wrong-doing.
“Warning signs”
Bloomberg found five projects that sold carbon offsets to EU countries and the UK that “exhibited warning signs” such as the absence of relevant equipment or audits carried out by a verifier who “rubber-stamped more than 20 projects that German authorities have since disqualified”.
Between 2020 and 2022, one project in Shandong Province, in eastern China, sold carbon credits to companies in Austria, Poland, and the UK. Müller-BBM Cert’s 2022 verification report states that,
The project activity generates GHG emission reductions by recovery and associated gas from remote and scattered oil wells in Shengli Oilfield which would otherwise be flared, and to process the recovered gas into hydrocarbon products.
When Bloomberg’s journalists visited the project site, they found “no evidence of gas capture equipment. Instead: belt pumping units extracting oil, cylinders for recovering liquids and a flare tower to burn — not capture — the gas, according to BNEF’s visual analysis.”
Shengli Doro Energy Corp., the project owner, did not respond to Bloomberg’s requests for comment.
The auditor-developer revolving door
Bloomberg reports that during 2020, Jing Wang, also known as Robin Wang, was employed as both an auditor and developer of carbon offset projects. He was employed by both Verico and Beijing Karbon, a Chinese consulting firm that developed UER projects.
He was one of the 17 people under investigation in Germany. Wang no longer works for Verico.
Sorge and White write that, “Between 2020 and 2024, Wang audited more than 20 projects developed by Beijing Karbon, that sold credits into Germany, official documents show.” He also audited at least two projects that sold carbon credits into Austria, Cyprus, Estonia, and Hungary.
Beijing Karbon, or one of its shell companies, developed at least 30 projects that the German authorities found to be “suspicious”, Bloomberg reports.
Beijing Karbon registered at least five UER projects on Chinese property that it did not own. The actual owner only found out when contacted by a whistleblower.
One project was registered at a location that TÜV Rheinland and Verico claim to have visited in 2021 and 2022. But the project coordinates are an area of empty sandy desert. A whistleblower alerted German authorities to the situation in 2023. When investigators started asking questions, Verico pointed them to a new location. The second location did not meet German regulatory requirements for carbon offset generation, Bloomberg reports.
Carbon credits in the EU’s emissions trading system
The EU recently decided to allow international carbon credits in its emissions trading system. Federico Terreni, climate policy manager at Transport & Environment, told Bloomberg that this could create a bigger market for dubious carbon credits.
“Without rigorous safeguarding, it risks creating a paper tiger of Europe’s climate efforts. There is ample evidence that most offsetting and carbon credit schemes used today are a scam.”
If the EU could implement “rigorous safeguarding” that would be a first in the world of carbon trading. A 2024 analysis of 2,346 carbon projects found that 84% of the carbon credits did not constitute real emission reductions. That’s 812 million junk carbon credits.
But even if the carbon credits were all miraculously genuine, allowing carbon credits into the EU’s carbon trading scheme would allow for massively increased greenhouse gas emissions. The NewClimate Institute calculates that allowing Article 6 carbon credits into the EU’s emissions trading system would allow the EU to emit 50% more greenhouse gases in 2040.
