Inspenet, September 5, 2023.
Just six months after taking over as CEO of Shell Plc, Wael Sawan quietly left the world’s largest business project related to reducing its carbon footprint. These environmental projects aim to neutralize the effects of carbon dioxide emissions on global warming.
In June, during a presentation to investors, Sawan unveiled a revised strategy for the European oil company. This included cost cuts and a greater focus on profitable activities like oil and gas .
What was equally notable was what he failed to mention: he made no reference to the company’s earlier commitment to allocate up to $100 million a year to build a pool of carbon credits as part of its goal of achieving net zero carbon emissions by the year 2050.
The company confirmed the removal of targets from the offset program, as well as plans to earn a massive 120 million carbon credits a year by the end of the decade through carbon sequestration projects involving trees, plants and other natural resources, many of which would be developed by Shell. This would have represented around 10% of their total emissions.
Shell’s position on carbon footprint reduction
The company has not announced new commitments in terms of offsetting emissions or outlined its strategy to meet its climate goals in the future.
This change reflects both Sawan’s renewed focus on the oil and gas business, which is the company’s main source of profit, and a recognition that previous goals were simply unachievable.
In the last two years, Shell has had virtually no activity in this area. They have invested just $95 million, less than half their original budget, building and financing carbon-reducing projects in regions from West Africa to the Brazilian Amazon and farmland in Australia. . These projects have generated little compensation and Shell has faced difficulties in finding projects that meet its quality standards.
So far, most of the criticism has focused on quality. Extensive research, including several by Bloomberg Green, has revealed that many offsets fail to deliver on promises of environmental benefits. Shell strove to address this problem by setting rigorous standards, committing significant financial resources and drawing on more than a century of engineering experience. However, he realized that focusing on quality limited availability. You could have high-quality tradeoffs or many tradeoffs, but not both.
“It’s really hard to get scale from high-quality credits,” said Gilles Dufrasne, Carbon Market Watch’s head of carbon policy. “The two forces (volume and quality) work against each other.”