Germany’s leading biomethane company, Landwärme GmbH, has filed for insolvency, blaming fraudulent activities in the industry that the government has allegedly ignored. This comes just a month after the Farmers’ Association publicly criticized the Ministry of the Environment for inaction in the face of alleged biodiesel fraud, which reportedly caused losses in the “hundreds of millions” for German farmers.
Landwärme GmbH declares insolvency affecting 140 employees
On Tuesday, August 13th, Landwärme GmbH, along with its parent company LW Capital GmbH, began restructuring under self-administration. According to a company statement, the salaries of the 140 employees at their Berlin and Munich locations are secured by the Federal Employment Agency. The company attributes its financial difficulties to the ongoing decline in greenhouse gas reduction quotas (THG quotas) since early 2023, which they market.
THG quotas are payments made by oil companies to offset the CO₂ emissions produced by their products, promoting the transition to renewable transportation. These quotas can also be met by investing in biofuels or green hydrogen-based fuels (E-Fuels) or by investing in charging points. Landwärme GmbH is a significant player in this market, primarily trading in biomethane and advising farmers on selling their biogas.
Fraudulent biodiesel imports from Asia devastate the industry
Since early 2023, Landwärme and others in the sector have observed a sharp decline in THG quota prices, partly due to the influx of biodiesel from Asia, which has been falsely labeled, leading to widespread market disruption. The company estimates that this fraud has caused a financial loss of approximately €4.5 billion to the industry.
These fraudulent activities have been reported for over a year, with allegations that palm oil from Indonesia and Malaysia is being mislabeled as climate-friendly biodiesel after being shipped to Europe. The company accuses authorities, including the Federal Environment Agency and the German Emissions Trading Authority, of failing to investigate, prosecute, or sanction these fraud cases, despite public awareness.
Massive rise in biodiesel imports from China
Data shows a significant increase in biodiesel imports from China, exploiting EU subsidies. In the first half of 2022, around 12,000 tonnes of biodiesel were shipped from China to Europe. By January 2023, this figure had surged to 260,000 tonnes, and between January and April 2023, more than 830,000 tonnes were imported from China to Europe, an 83% increase from the previous year. This surge has caused biodiesel prices to plummet.
Claus Sauter, CEO of another biofuel company, Verbio AG, criticized the government in a June 2024 statement, claiming that the German taxpayer has been defrauded of billions through these fake projects. He condemned the lack of political accountability, calling it a “major scandal.”
Environment ministry denies allegations, points to broader EU issue
In response to inquiries from the press, the Ministry of the Environment denied the allegations, stating that it is closely monitoring the situation. A ministry spokesperson emphasized that the issue is not just a German problem but one that affects the entire EU market, calling for an EU-wide solution. However, the ministry has yet to confirm the fraud cases involving Chinese biodiesel.
The ministry also clarified that the responsible Federal Office for Agriculture and Food (BLE) immediately informed the relevant federal ministries and has involved the national law enforcement authorities and the EU Commission. The Commission has since announced an anti-dumping investigation, which the Ministry of the Environment supports.
Landwärme seeks recovery, criticizes slow government response
Landwärme’s slow response to the crisis has pushed the company into insolvency, and it is now seeking a strong financial partner to restore stability. The company has appointed Anna Katharina Wilke as the restructuring manager and Lucas F. Flöther as general representative, both from the law firm Flöther & Wissing.
Landwärme CEO Zoltan Elek expressed hope for the future, stating that the company would use the insolvency proceedings to position itself for long-term viability and return to profitability. However, he emphasized that the situation could have been avoided if the government and authorities had taken decisive action against the alleged fraud in the biodiesel and UER projects.
