Shell scraps its carbon offsets programme

A “damning indictment of offsets”, Bloomberg writes

PHOTO Credit: Amnesty International

In April 2019, Shell announced that it would spend US$300 million on “natural ecosystems as part of its strategy to act on global climate change”. And in January 2023, Shell said it had set aside more than US$450 million to invest in carbon offsetting projects.

Now, Bloomberg reports, Shell has scrapped its carbon offsets programme. It has also scrapped its plan to buy 120 million carbon offsets per year by 2030.

Wael Sawan, who was appointed Shell’s CEO in January 2023, recently told investors that the company was scrapping its target of reducing oil output by up to 2% per year.

Profits from oil and gas are booming, while returns from renewables are poor, Reuters reports. Shell can make more profits from oil and gas than it can from renewables.

In 2022, Shell made profits of US$40 billion, the highest in the company’s 115-year history.

In an interview with The Times in March 2023, Sawan said,

“I am of a firm view that the world will need oil and gas for a long time to come. As such, cutting oil and gas production is not healthy.”

A “damning indictment of offsets”

Shell had planned to spend US$100 million per year on carbon offsets. Over the past two years, Shell spent US$95 million, less than half the target.

“Shell has struggled to find projects that meet its standards for quality,” Bloomberg reports.

It's a newly damning indictment of offsets, which have become an important if controversial “climate solution” for most big companies.

According to Bloomberg, Shell aimed to solve the problem of poor quality offsets, “with stringent requirements, deep pockets and more than a century of engineering expertise”. The company “quickly learned that focusing on quality limited supply. It could have good offsets, or a lot of them, but not both.”

But the reality is that Shell bought carbon offsets from several disastrous REDD projects. Let’s take a look at just three of these projects:

Cordillera Azul National Park REDD project, Peru

Journalist David Hill recently published an overview of the publicly available criticisms of the Cordillera Azul REDD project. Between them Shell and TotalEnergies have bought 87% of the carbon offsets sold from this project.

Hill writes that,

There is no way that anyone at Total - or Shell, or indeed any other company - should be able to claim with a straight face that somehow their emissions are being offset by what is going on in and around the Cordillera Azul, or that the park and project don’t constitute something of a human rights fiasco.

REDD-Monitor first wrote about this project in November 2018:

The project failed to respect the rights of the Indigenous Kichwa. In April 2023, the UN Committee on the Elimination of Racial Discrimination wrote to Peru’s government about the impact of the project on the rights of the Indigenous Peoples living there.

Southern Cardamom REDD+ Project, Cambodia

Wildlife Alliance, the organisation running the Southern Cardamom REDD+ Project in Cambodia, carryies out paramilitary operations with government rangers and military police. Local communities have their homes burned down, and a tractor destroyed. This is fortress conservation.

In June 2023, Verra, the Washington DC-based standards organisation, suspended the project and opened a review following a report it had received from Human Rights Watch.

Wildlife Alliance started the REDD project in 2015, in partnership with Wildlife Works, and the Cambodia’s Ministry of the Environment. “We were always very aggressive,” an ex-adviser to Wildlife Alliance told the Phnom Penh Post four years before the project started.

“I don’t know if we really violate human rights, but for sure, sending complete families on roads, burning their houses with their belongings isn’t really fair. The few things they have, for us is nothing, but for them it’s everything.”

Katingan Peatland Restoration and Conservation Project, Indonesia

The Katingan project is run by a private company called PT Rimba Makmur Utama. Serious fires affected the project in 2019. A journalist who visited the area said, “The burnt area is huge. I walked about two miles and still can’t see the end of the fire scar.”

There are also land conflicts, with Dayak Indigenous People cultivating plots of land inside the project area.

As with all REDD projects, the number of carbon offsets generated by the project is based on a story about what would have happened in the absence of the project. And by definition this counterfactual baseline is impossible to verify because the project did go ahead.

The project developer claims that,

In the absence of our work, the project area would have been cleared of forest, and the peat drained, gradually releasing the vast carbon stocks into the atmosphere.

Without the REDD project, about one-third of the forest would be converted to acacia plantations according to project documents. A 2020 Greenpeace report challenges this claim, arguing that all of the plantations established in Central Kalimantan, the Indonesian province where the project is, were on mineral soils.

The project area has predominantly peat swamp soils, which would need to be drained before they can be planted with acacia trees – at considerable extra cost.

Offsetting is a dangerous distraction

Earlier this year, Flora Ji, vice president of Nature-based Solutions at Shell, gave an interview with S&P Global. Ji explained that,

“The carbon market may not be perfectly functioning everywhere yet, and its flaws need to be highlighted and discussed – that's how markets evolve and improve. But it is also an important enabler of emissions reduction and drives critically important resources towards the conservation and restoration of at-risk ecosystems.

She’s right. The carbon market is not “perfectly functioning everywhere”. But she’s wrong to suggest that it somehow could do in the future.

The reality is that the carbon market has functioned very well for the past 35 years as a distraction from the damage caused by Big Polluters like Shell. That, after all, is the purpose of the carbon market.

The carbon market is not, as Li argues, “an important enabler of emissions reduction”. It is a dangerous distraction from the urgent need to leave fossil fuels in the ground.

The good news, is that Shell has long been a major backer of carbon offsets. That backing - and funding - has now gone. But the impact of Shell’s operations on the global climate remains. And Shell’s new CEO, Wael Sawan, plans to increase these deadly operations rather than decrease them.

How about Shell stopping the destruction and using its vast profits to restore the ecosystems that it has destroyed?

How about starting with the Niger Delta in Nigeria?

And how about doing this not to generate carbon offsets, but as reparations to the communities whose livelihoods and health have been so badly affected by Shell’s polluting operations?

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