Greenwash alert: Petrobras claims that its Gasolina Podium is “carbon neutral” because it bought offsets from the Envira Amazônia Project
Baseline “not plausible”, ongoing deforestation, and failure to address land rights for local communities
In September 2023, Brazil’s state-run oil corporation, Petrobras, bought 175,000 carbon offsets. Petrobras declined to tell Folha de S. Paulo how much it paid for the offsets. “Due to market dynamics, this information will not be disclosed,” the company said in a statement.
The company plans to spend at least US$120 million on carbon offsets by 2027.
Reuters writes that in buying the carbon offsets, the company was “seeking to burnish its environmental credentials in a broader push to become more sustainable”. Greenwash would be a better description.
Reuters reports Sandro Barreto, Petrobras’ executive manager of sales to the internal market, as saying that the carbon offsets will “render carbon neutral around a year’s worth supply of its premium gasoline, Gasolina Podium”.
Petrobras is hoping to profit from its “carbon neutral” claims. In São Paulo, Podium costs about R$2.60 per litre more than other petrol.
Fossil fuels cannot be carbon neutral. Even Renat Heuberger, CEO and co-founder of South Pole, the biggest carbon consulting firm in the world, agrees with that statement.
“It’s such obvious nonsense,” Heuberger told Bloomberg Green when asked about TotalEnergies’ claim of “carbon neutral” fossil gas based on carbon offsets that South Pole had sold TotalEnergies from the Kariba REDD project in Zimbabwe. “Even my 9-year-old daughter will understand that’s not the case. You’re burning fossil fuels and creating CO₂ emissions.”
It gets worse. The project that supplied the carbon offsets, the Envira Amazônia Project, set a fake baseline by exaggerating the risk of deforestation, allows deforestation to continue, and fails to respect the rights of the communities living in the project area.
The Envira Amazônia Project
The Envira Amazônia Project covers an area of almost 40,000 hectares near Feijó in the state of Acre, Brazil. The land is part of a property covering 200,000 hectares which is claimed by an agro-business company called JR Agropecuária e Empreendimentos EIRELI.
The company was created in 2009, with the plan to clear 20% of the Envira Amazônia Property. Valuable timber would be harvested and the land would then be cleared for cattle ranching.
JR Agropecuária e Empreendimento is running the project together with two US-based companies called CarbonCo LLC and Carbon Securities. The project started in August 2012 when JR Agropecuária e Empreendimentos signed an agreement to develop a forest conservation project rather than clearing the land for timber and cattle ranching.
Over the first ten years, the project developers anticipated generating an average of 1,259,646 carbon offsets per year.
Since the project started it has sold at total of 11,990,260 carbon offsets.
Stand for Trees, which is supported by USAID, offers carbon credits from the project for sale at US$20 each.
On its website, Stand for Trees states that,
By supporting this project, you help preserve a remote tropical rainforest that was in danger of becoming a cattle ranch.
Stand for Trees claims that the project “Enhances the lives of rural forest communities through the implementation of health and education programs.”
Landowners are, according to Stand for Trees, “implementing many activities to assist communities and mitigate deforestation pressures, such as agricultural support, deforestation patrols, and sustainable economic alternatives”.
Empty promises
In March 2018, World Rainforest Movement visited families living in the project area. WRM found a very different picture. “Community members were unaware that the project had been ‘approved’ and was selling carbon credits already”, WRM’s Jutta Kill writes in a report about the visit.
Land tenure within the project area is complicated and disputed - like many areas in the Brazilian Amazon. Rubber tappers have been living on the land for generations. Few have managed to obtain legal title to the land.
The only benefit that communities had received was a dental kit consisting of a small tube of toothpaste and a toothbrush, along with an offer of a one-off free visit to the dentist.
A 2022 verification report by SCS Global mentions that solar panels and water filters have been provided to “registered families”. However, children of these “registered families” have not received solar panels or water filters.
SCS Global also notes that a health clinic has been built under the project.
When the project was presented to villagers landowners promised agricultural extension training courses, patrols of potential deforestation sites, granting land tenure to local communities, and alternative economic activities including collection of medicinal plants and açaí.
These are “empty promises”, WRM writes. The community school had not been in use for two years when WRM visited and was in a poor state.
And the project was placing restrictions on communities living in the project area:
The Envira REDD+ project prohibits use of the forest by rubber tapper families outside the 150 hectares currently available to each of the families living inside the REDD+ project site.
While large-scale landowners continue deforestation for cattle ranching in the surrounding areas, rubber tappers and small-scale farmers are prevented from using the land that they have used for generations.
WRM notes that,
The REDD+ project threatens the future of the community because it imposes restrictions on the future use of the land and prevents reactivation of peasant farming plots abandoned in the last decade.
“Baseline is not plausible”
In March 2022, the project was open for public comment. The Nature-based Solutions Brazil Alliance, an association of REDD project developers and carbon traders including Biofílica, BVRio, Carbonext, Ecosecurities, Mirova Natural Capital - Althelia Funds, Permian, and South Pole, provided a comment.
“The project’s baseline is not plausible,” the NBS Brazil Alliance wrote.
Based on observed deforestation in proxy areas and property boundaries, the PP [project proponents] “set an annual deforestation rate of 16% and projects the planned deforestation of more than 30,000 hectares in the first year of the project’s life alone. Furthermore, it later assumes (arbitrarily and “conservatively”) deforestation of 8,000 ha for the first 4 years.
In a Verification Report dated 13 September 2022, the project proponents dismissed this criticism. “[I]t is unclear what meant by ‘the project’s baseline is not plausible’,” the project proponents write. Here are a few synonyms for “not plausible” just in case the project proponents (or the project auditors, or Verra, or anyone else) are still struggling with this:
not credible;
not reasonable;
not believable;
not likely;
not feasible;
not probable.
The point is that the project proponents did what almost all project proponents do in setting a baseline. They exaggerate the threat to the forest that they claim that they are protecting. They do so because the bigger the claimed threat to the forest, the more money they can make from selling carbon offsets based on the so-called avoided deforestation.
And of course, because it’s a counterfactual baseline - a story about what might have happened if the project did not go ahead - it’s impossible to verify. Baselines are “untestable guesses”, as the authors of a 2016 paper in the International Forestry Review put it.
Thales West is a geography professor at the Free University of Amsterdam. He has been researching carbon offsets for 15 years. He is critical of the way baselines are set under Verra’s system.
West co-authored some of the research behind January 2023 headline in The Guardian: “Revealed: more than 90% of rainforest carbon offsets by biggest certifier are worthless, analysis shows”.
West recently told Gazeta do Povo that,
“The credits are based on deforestation compared to a baseline scenario, which is the deforestation that would occur without the presence of the project. The problem is that the way it is calculated is problematic. If the method that developers have to follow is problematic, the result is problematic.”
The Envira Amazônia project proponents argue that a deforestation rate of 16% was calculated for the project, but “this was higher than was likely to be observed in the with-project case due to concerns about the availability of equipment to clear 32,000 ha of forest in a single year”.
So the project proponents reduced the figure to 8,000 hectares per year. But why 8,000? Why not 2,000? Or 15? Or 20,000? It is, as the NBS Brazil Alliance writes, completely arbitrary.
Nevertheless, the auditors, SCS Global Services, decided that, “The project’s response is appropriate” and “consistent with the original project description”.
Of course it’s consistent with the project description - the project proponents produced both the project description and the response. But that doesn’t make it in any way meaningful.
Community rights
The NBS Brazil Alliance also questions whether a full process of free, prior and informed consent was carried out. It also notes that no functional and effective benefit sharing mechanism is in place. “What you find in the Monitoring Report is a transcript of the Project Description section,” the NBS Brazil Alliance notes.
The project proponents responded as follows:
The Project has been validated to the CCB with Gold Level Distinction and has previously been verified three times to both the VCS and CCB; thus demonstrating, amongst many things, the Project’s net community benefits and its FPIC process.
SCS Global notes that despite the fact that the project was verified their audit revealed problems with key project benefits including land tenure and agricultural extension classes. SCS Global mentions visits by an agronomist “to push forward the land tenure process”.
Which suggests that in more than 10 years, little actual progress has been made on the “land tenure process”. SCS Global issued two “Forward Action Requests” regarding land tenure that are to be addressed before the next audit.
“Most of the project benefits derive from the land titling,” SCS Global writes in its Verification Report, “so demonstrating tangible progress on the land tenure process is directly tied to assessing the project’s objectives for providing community-level benefits
On 23 May 2023, Verra wrote to CarbonCo LLC stating that the project’s baseline reassessment was “incorrectly submitted as a crediting period review and that the baseline reassessment submission process has not been correctly followed”.
Verra therefore denied the VCS Crediting Period Renewal request for the project. Until the baseline reassessment is correctly submitted, the project cannot issue carbon offsets generated more recently than 31 December 2021.
The carbon offsets that Petrobras bought were from the years 2019, 2020, and 2021.
Petrobras put out a disclaimer about its purchase of carbon credits, which states that,
Carbon credits used to offset carbon emissions are a complex and constantly evolving market instrument, subject to market fluctuations, regulatory changes and other uncertainties. The value and reliability of carbon credits may vary over time.
No kidding. Unfortunately Petrobras doesn’t admit that carbon offsets are a worthless act of greenwashing.
Yes, worthless regarding the climate, or more accurately, of negative value to the climate, but not entirely worthless - they offer peace-of-mind for the marginally climate-aware investor, soothing their conscience as an indulgence, similar to the way that you purchase hope via a lottery ticket. When a company does this and advertises that fact, that is greenwashing, but that scheme can only continue while “the market” connotes value onto these “credits.” If businesses smarten up and see the con, then they will stop wasting their income in this market, and taxing authorities should also stop allowing these purchases as a deductible expense.