Received 04.06.2024. Revised 10.07.2024. Accepted 02.09.2024.
Abstract. Carbon credits are an increasingly important tool for decarbonization. They are of particular importance to oil and gas and other energy companies for which burning fuel comprise the core of the business. The two main sources behind carbon credit emission are renewable energy projects and projects to sequester greenhouse gas emissions from natural systems, mainly forests. Without offsetting mechanisms, including nature-based solutions, companies with high carbon footprint are fundamentally unable to achieve net carbon neutrality. Despite challenges, the voluntary carbon credits markets continue to grow. In 2020–2022 the world’s 34 largest companies by capitalization bought certificates equal to 38 million tons of carbon emissions, which is equivalent to the combined greenhouse gas emissions of Ethiopia and Kenya. 50% of these credits were purchased by oil and gas companies and 28% by automobile concerns. In the near future, voluntary carbon markets will continue develop in an imperfect mode of trial and error, which is inherent to all markets at their early stages of development. The author shares the view that a large-scale non-ideal credit/offset market will be more conducive to solving the strategic task of decarbonizing economic growth than an ideally organized but small-scale market. In principle, this position is supported by authoritative regulators, whose policy is critical for the development of a new market. In May 2024, key economic departments of the US government, including the Department of Agriculture, the Department of Energy and, most importantly, the Department of the Treasury, unequivocally supported the development of a carbon credit market that promotes decarbonization, opens up new opportunities for investment in climate projects and enables realization of wide externalities that positively influence economic growth and preservation of biodiversity.
Keywords: oil and gas companies, greenhouse gases emission, decarbonization, carbon credits/offsets, nature-based solutions
REFERENCES
1. Seddon N., Sengupta S., García-Espinosa M., Hauler I., Herr D., Rizvi A.R. Nature-based Solutions in Nationally Determined Contributions. Oxford, University of Oxford, 2019. 62 p. Available at: https://portals.iucn.org/library/sites/library/files/documents/2019-030-En.pdf (accessed 25.01.2023).
2. Griscom B.W., Adams J., Ellis P.W., Fargione J. Natural Climate Solutions. Proceedings of the National Academy of Sciences, 2017, vol. 114, no. 44, pp. 11645-11650. Available at: https://doi.org/10.1073/pnas.1710465114
3. Reise J., Siemons A., Böttcher H., Herold A., Urrutia C., Schneider L., Iwaszuk E., McDonald H., Frelih-Larsen A., Duin L., Davis M. Nature-based Solutions and Global Climate Protection. Berlin, German Environment Agency, 2022. 81 p. Available at: https://www.umweltbundesamt.de/sites/default/files/medien/1410/publikationen/2022-01-03_climate-change_01-2022_potential_nbs_policy_paper_final.pdf (accessed 20.05.2023).
4. Harrison K. Carbon Offset Demand Hits Record in 2023 off Huge December. BloombergNEF, 11.01.2024. Available at: https://about.bnef.com/blog/carbon-offset-demand-hits-record-in‑2023-off-huge-december/ (accessed 15.01.2024).
5. Gabbatiss J. Analysis: How Some of the World’s Largest Companies Rely on Carbon Offsets to ‘Reach Net-Zero’. Carbon Brief, 28.09.2023. Available at: https://interactive.carbonbrief.org/carbon-offsets-2023/companies.html (accessed 20.12.2023).
6. Jackson R.R., Tofighi-Niaki A. Energy Is at the Heart of Everything We Do: Chevron’s Junk Climate Action Agenda and How It Intensifies Global Harm. Corporate Accountability, 2023. Available at: https://corporateaccountability.org/wp-content/uploads/2023/05/Chevron-expose_English_FINAL.pdf (accessed 20.06.2023).
7. Kill J., Counsell S. How Shell Is Using Nature-Based Solutions to Continue Its Fossil Fuel Agenda. Milieudefensie, 13.10.2022. 84 p. Available at: https://en.milieudefensie.nl/news/2486-f19b4682dbb1aaeeb1bff8680f75c70b-2.pdf/@@download/file/02293-OPM%20Shell%20NBS%20analysis%2020.pdf (accessed 20.05.2024).
8. DiChristopher T. Oil Giant Shell Has a New Plan for Cutting Carbon Footprint: Planting Millions of Trees. CNBC, 08.04.2019. Available at: https://www.cnbc.com/2019/04/08/oil-giant-shell-has-a-new-carbon-footprint-plan-millions-of-trees.html (accessed 22.01.2023).
9. Daly C. Sowing Seeds for the Future. Shell, 2019 Inside Energy Articles, pp. 15-17. Available at: https://www.shell.com/news-and-insights/inside-energy-stories/_jcr_content/root/main/section_copy_copy/call_to_action_11159_509637525/links/item1.stream/1686910875541/3993a1a03a1dc91c48e8cb972c57acab0e78605d/2019-inside-energy-articles.pdf (accessed 10.07.2024).
10. Armstrong R. The Great Green Land Grab. Wicked Leeks, 30.05.2022. Available at: https://wickedleeks.riverford.co.uk/features/the-great-green-land-grab/ (accessed 22.01.2023).
11. Selibas D. Questions over Accounting and Inclusion Mar Guyana’s Unprecedented Carbon Scheme. Mongabay, 28.04.2023. Available at: https://news.mongabay.com/2023/04/questions-over-accounting-and-inclusion-mar-guyanas-unprecedented-carbon-scheme/ (accessed 20.07.2023).
12. Lakhani N. ‘Worthless’: Chevron’s Carbon Offsets are Mostly Junk and Some May Harm, Research Says. The Guardian, 24.05.2023. Available at: https://www.theguardian.com/environment/2023/may/24/chevron-carbon-offset-climate-crisis (accessed 20.06.2023).
SOURCES
1. Climate Change 2022: Mitigation of Climate Change. Contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Intergovernmental Panel on Climate Change, 2022. 2029 p. Available at: https://www.ipcc.ch/report/ar6/wg3/downloads/report/IPCC_AR6_WGIII_FullReport.pdf (accessed 20.05.2023).
2. Carbon Majors 2018 Data Set Released December 2020. Climate Accountability Institute. Available at: https://climateaccountability.org/wp-content/uploads/2020/12/TopTwenty-CO2e-1965-2018-Table.png (accessed 20.05.2023).
3. Climate Change: The IPCC Response Strategies. Intergovernmental Panel on Climate Change, 1990. Available at: https://www.ipcc.ch/site/assets/uploads/2018/03/ipcc_far_wg_III_full_report.pdf (accessed 20.05.2023).
4. Enabling Human Progress. Chevron 2022 Corporate Sustainability Report. Chevron, 2022. 84 p. Available at: https://www.chevron.com/-/media/shared-media/documents/chevron-sustainability-report-2022.pdf (accessed 03.07.2024).
5. Chevron 2020 Corporate Sustainability Report. Chevron, 2020. 68 p. Available at: https://www.chevron.com/-/media/shared-media/documents/chevron-sustainability-report-2020.pdf (accessed 03.07.2024).
6. Responsible Energy. Shell PLC Sustainability Report 2022. Shell, 2022. 91 p. Available at: https://reports.shell.com/sustainability-report/2022/_assets/downloads/shell-sustainability-report-2022.pdf (accessed 03.07.2024).
7. Responsible Energy. Royal Dutch Shell PLC Sustainability Report 2020. Shell, 2020. 102 p. Available at: https://reports.shell.com/sustainability-report/2020/servicepages/downloads/files/shell-sustainability-report-2020.pdf (accessed 03.07.2024).
8. Chevron Carbon Offsets. Chevron. Available at: https://www.chevron.com/what-we-do/energy/new-energies/partnerships#carbonoffsets (accessed 10.01.2024).
9. Chevron New Energies Carbon Offsets. Chevron. Available at: https://www.chevron.com/what-we-do/energy/new-energies (accessed 10.01.2024).
10. Chevron and Restore the Earth Foundation Agree to Collaborate on Carbon Offsets Reforestation Project in Louisiana. Chevron, 28.03.2022. Available at: https://www.chevron.com/newsroom/2022/q1/chevron-and-restore-the-earth-foundation-agree-to-collaborate-on-carbon-offsets-reforestation (accessed 10.01.2024).
11. Chevron to Fund New Soil Carbon Capture Pilot and Blue Carbon Research Projects in Western Australia. Chevron Australia Pty Ltd, 11.08.2023. Available at: https://www.chevron.com/newsroom/2023/q3/chevron-to-fund-new-soil-carbon-capture-pilot-and-blue-carbon-research-projects-in-western-australia (accessed 10.01.2024).
12. Voluntary Carbon Credits: Shell Environmental Products. Shell. Available at: https://shellenergy.com/business/products-and-services/renewable-solutions/carbon-credits-including-nature-based-solutions (accessed 22.01.2023).
13. Carbon Credits Including NBS. Shell Energy. Available at: https://shellenergy.com/business/products-and-services/renewable-solutions/carbon-credits-including-nature-based-solutions/ (accessed 22.01.2023).
14. Carbon Compensation for Fleets. Shell. Available at: https://www.shell.co.uk/business/mobility/shell-fleet-solutions/sustainability/carbon-neutral.html (accessed 22.01.2023).
15. Redd+ Katingan Mentaya, Indonesia. Shell. Available at: https://www.shell.co.uk/shell-go-plus/carbon-emissions-programme/redd-plus-katingan-mentaya-indonesia.html (accessed 22.01.2023).
16. Canadian Drivers Set to Go Carbon Neutral with Shell. Shell, 12.11.2020. Available at: https://markets.businessinsider.com/news/stocks/canadian-drivers-set-to-go-carbon-neutral-with-shell-1029795902 (accessed 22.01.2023).
17. Projects Generating Carbon Credits for Customers. Shell. Available at: https://fourleafdigital.shell.com/webapps/EPTB-NBS-Globe/ (accessed 22.01.2023).
18. Nature Based Solutions. Shell. Available at: https://www.shell.com/what-we-do/nature-based-solutions.html (accessed 22.01.2023).
19. Hess Corporation and the Government of Guyana Announce REDD+ Carbon Credits Purchase Agreement. Guyana Energy Conference and Supply Chain Expo, 14.07.2022. Available at: https://guyanaenergy.gy/post?slug=hess-corporation-and-the-government-of-guyana-announce-redd-carbon-credits-purchase-agreement (accessed 20.05.2023).
20. Hess’ Carbon Credits Deal with Guyana Outweighs Its 2022 Global Emissions Almost 10 Times. OilNOW, 26.07.2023. Available at: https://oilnow.gy/featured/hess-carbon-credits-deal-with-guyana-outweighs-its-2022-global-emissions-almost-10-times/ (accessed 20.07.2024).
21. ART Issues World’s First Jurisdictional Forestry TREES Carbon Credits to Guyana. ART, 01.12.2022. Available at: https://www.artredd.org/wp-content/uploads/2022/12/ART-Issues-Worlds-First-Jurisdictional-Forestry-TREES-Carbon-Credits-to-Guyana.pdf (accessed 20.07.2023).
22. Art’s Controversial Certification of Carbon Credits to the Government of Guyana. A Case Study on Challenges for “High-Integrity” Labels in Carbon Markets. Amerindian Peoples Association. Forest Peoples Programme. Rainforest Foundation US, 27.02.2024. Available at: https://www.forestpeoples.org/sites/default/files/documents/Arts%20Controversial%20Certification%20of%20Carbon%20Credits%20to%20the%20Government%20of%20Guyana%20-%20A%20Case%20Study%20on%20Challenges%20for%20High%20Integrity%20Labels%20in%20Carbon%20Markets.pdf (accessed 20.03.2024).
23. Líder em geração de créditos de carbono, Carbonext capta recursos da Shell para proteger, reflorestar e desenvolver bioeconomia na Amazônia. TN PETRÓLEO, 11.07.2022. Available at: https://tnpetroleo.com.br/noticia/lider-em-geracao-de-creditos-de-carbono-carbonext-capta-recursos-da-shell-para-proteger-reflorestar-e-desenvolver-bioeconomia-na-amazonia/ (accessed 10.02.2024).
24. Carbon Markets 2.0. Addressing Pain Points, Unlocking Impact. GenZero, December 2023. Available at: https://genzero.co/wp-content/uploads/2023/12/Carbon-Markets-2.0-Addressing-Pain-Points-Unlocking-Impact.pdf (accessed 20.01.2024).
No comments