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CO2 offsets from fossil industry prove to be a wash

6 July 2023
The climate promises of oil and gas companies are an 'empty box'. That is according to research conducted by scientist Mathieu Blondeel (Institute for Environmental Issues, VU Amsterdam) together with Gregory Trencher (Kyoto University, Japan) and Jusen Asuka (Tohoku University, Japan) on the fossil industry's climate strategy. "The CO2 offset policy of companies like Shell is the prototype of greenwashing," says Blondeel. 

It sounds like a good deal. You calculate the emissions from your flight to a sunny holiday destination and to offset the CO2 emissions, a patch of rainforest is preserved. Maybe a quick fix for your flight shame, but it doesn't help the environment, according to researcher Blondeel. "Let alone that this way we will meet the climate goals from the Paris climate agreement with it." Yet this appears to be the most widely used climate strategy according to Blondeel's research of oil and gas companies. Together with environmental scientists Trencher and Jusen, he analysed the CO2 offsetting practices of four major oil and gas companies:  BP, Shell, Chevron and Exxonmobil in the period 2020-2022. The result is a unique dataset that provides insight into the feasibility of claims by companies like Shell to be CO2 neutral by 2050.

CO2 credits
The four oil and gas companies surveyed all claim they want to become 'net-zero' companies. Meaning that they should bring emissions from their production activities, and those of the products they sell, as close to zero as possible and offset all remaining emissions. "The focus of our research was therefore on those offsets," explains Blondeel. 

For emissions that are difficult to phase out, a 'carbon credit' can be bought for every tonne of CO2 avoided or removed from the air. These credits are linked to an offset project, such as, for example, a forest management project in Brazil. Importantly, this is done on a voluntary basis in a global market and is separate from the mandatory Emissions Trading Scheme (ETS) for industry in the EU. However, these voluntary offsets are crucial in the climate strategy of a lot of companies, not just in the oil and gas industry. From 2019 to 2022, the value of the market doubled to around USD 2 billion and is expected to grow by another 100-fold by 2030.

Controversial practice
But 'offsetting' is also a controversial practice, according to Blondeel. The research team therefore wanted to show a broad picture of the shortcomings of this strategy in the oil and gas sector. Take Shell, for example. In 2019, the company claimed to be the first ever to sell a 'carbon-neutral' cargo of liquefied natural gas (LNG). Emissions from the production, transportation and final combustion of the gas would be offset because a forest was preserved in Indonesia. "Obviously, the reasoning wrings that not cutting down a forest offsets the emissions from your LNG cargo."

The vast majority (73%) of the 116 offset projects surveyed are based on avoiding emissions, such as forest conservation. But to have a real impact, projects should rather be those that actually remove CO2 from the air, such as planting new forests. Of all the credits bought by Shell in the period 2020-22, 85% were linked to avoidance, while for BP and Chevron the figure was as high as 100%. 

A second crucial finding is that most offset projects were started quite some time ago. The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) of the United Nations has a standard that only credits from projects started after 2016 can be bought. Linking older projects to emissions today is problematic, to say the least, and is too difficult to verify and guarantee their quality. 92% of BP's projects, 89% of Chevron's and 72% of Shell's projects started before 2016 and thus should not actually be used, according to the United Nations. 

Blondeel concludes, "Despite their claims that they purchase 'quality' credits, our analysis shows that their practices have at least a dubious climate impact. Because of the dominance of dated projects that also disproportionately focus on emissions avoidance, rather than effective CO2 capture and storage."

Plea for production cuts and stronger regulation
The scientists' research argues first and foremost for an industry climate strategy that prioritises a decrease in fossil fuel production and sales. "Carbon credits are seen too much as a 'get out of jail free' card," says Blondeel. Only for residual emissions, which are very difficult to phase out, can 'offsetting' be looked at. But even then, they argue for better regulation and much tighter quality control of the actual actions taken to offset CO2 emissions. "Our research shows that the system to offset CO2 emissions in its current set-up simply does not work as a climate strategy. There should be an international standard whose compliance is also strictly monitored." 

This week, the study "Do all roads lead to Paris?" was published in the renowned scientific journal Climatic Change.