The credits used come from two different offset projects; the first is a wind farm in northern China, initially developed under the Kyoto Protocol’s Clean Development Mechanism , the Hebei Guyuan County Dongxinying 199.5MW Wind Power Project, which is claiming credits for displacing coal in power generation.
Using a high-integrity credit to offset an oil shipment is good, he explains, but using vintage renewable projects that were developed under the CDM more than ten years ago is problematic.
“Increasing volumes and relatively low prices reflect a surge in cheaper credits from Asia,” they wrote in the first instalment of an annual State of the Voluntary Carbon Markets report in September 2021.
Over the course of 2021, there has been a steady increase in oil and gas companies shipping LNG and claiming carbon neutrality.
Crook is adamant that oil and gas companies should not be buying carbon credits to offset the emissions of LNG shipments.
“The most fundamental premise of offsetting is that all avoidable emissions are reduced and any remaining emissions are offset,” says Polly Hemming with think tank The Australia Institute.
Shell does not support a vintage cut-off date to improve offset integrity; instead the company focuses on the quality of credits in terms of environmental robustness and safeguards for local communities.
However, the oil major’s reliance on nature-based projects is under scrutiny.
In a recent report, it laid out how it is working to ensure the quality of the credits it is sourcing, including performing extra due diligence on aspects such as permanence, baseline setting, environmental and social safeguards, and revenue sharing.
“However, in some cases, we see challenges with the robustness and quality of the validation and verification audits,” it added.
In a bid to improve transparency around LNG shipments, industry group the International Group of Liquefied Natural Gas Importers has unveiled a framework for greenhouse gas neutrality, which aims to promote consistency in calculating emissions, reporting and monitoring.
A spokesperson for Australian oil and gas producer Woodside says it is “monitoring the continued development of international standards”, in response to a question about whether it would use the GIIGNL framework.
“With no commitments to cut production, there is no reason to believe any of the oil and gas companies are committed to carbon neutrality,” says David Tong, global industry campaign manager for the NGO Oil Change International.
“The only circumstance where I can think of it being appropriate for fossil fuel companies to buy offsets is to invest in climate restoration activities that are not linked in any way to their emissions,” says Hemming.