Nov 13 (Reuters) - The German cabinet on Wednesday

approved reforms to restrict oil companies from carrying excess

emissions reductions credits forward, in a step aimed at

boosting the biofuel industry that was hit by a quick drop in

carbon prices in recent years.

Under current law, oil companies must gradually lower the

carbon impact of their fuels, with a target to reach a 25%

reduction by 2030, from 9,35% today.

Companies can meet these goals by using advanced biofuels,

synthetic fuels, green hydrogen, and supporting electric vehicle

infrastructure.

In recent years, oil companies have met emissions goals by

selling extra biodiesel; in 2022 alone, they exceeded the target

by 24%, or 3.4 million metric tons, data from the environment

ministry showed.

According to the reforms, oil companies can no longer use

past greenhouse gas reduction quotas to meet targets in the

coming two years, with this option only reopening in 2027. The

rule, which does not require parliamentary approval, will come

into force immediately.

Environment Minister Steffi Lemke said the move will

safeguard carbon reduction goals and improve the outlook for

biofuel producers, green hydrogen suppliers, and electric

vehicles charging providers.

As demand for clean fuel alternatives rises, she added, it

will also strengthen long-term climate action in transportation.

Germany's biofuel industry last week issued an urgent appeal

to the government, citing severe fraud in the greenhouse gas

reduction quota market that has driven prices down sharply and

threatened the sector's stability, causing quota prices to

plummet to around 90 euros ($95.23) from nearly 500 euros in two

years.

In a joint letter addressed to the environment minister,

biofuel industry and companies involved in the greenhouse gas

reduction quota said the fall of quota prices forced companies

into insolvency and stalled investment in clean energy

alternatives such as advanced biofuels, green hydrogen, and

electric vehicle infrastructure.

In September, Germany's Environment Agency said it had

rejected carbon credits for 215,000 metric tons of CO2 emissions

from oil companies due to suspected fraud involving climate

projects in China.

($1 = 0.9451 euros)