Stockholm (NordSIP) – The limitations of two climate change mitigation measures favoured by the oil industry have been starkly brought to light following an investigation by Greenpeace Canada into a local carbon credit scheme operated by Shell. In its report Selling Hot Air, published on 6 May 2024, the climate NGO reveals Shell’s practise of double counting the CO2 related to its Canadian Quest carbon capture and storage (CCS) project.
According to Greenpeace, there is no suggestion of illegal activity, as the so-called phantom credits are one of the benefits of a deal struck between Shell and the provincial Government of Alberta in 2008. Correspondence between the two parties obtained under Freedom of Information rules includes a letter written in February 2009 to the Alberta government asking for multiple credits to be assigned for each tonne of captured CO2. They had asked for a 3 to 1 ratio but were ultimately granted the current 2 for 1 tonne ratio as an additional subsidy, which has netted the firm CAD 200 million worth of sales based on carbon capture that never happened.
Attempt to clean up tar sands’ dirty reputation
The Province of Alberta is one of the main locations for the controversial exploitation of tar sands for the production of synthetic crude oil. Faced with mounting criticism, the provincial government announced a new climate plan in 2008 that relied largely on CCS to achieve the elimination of 30 megatonnes (MT) of CO2 by 2020 and up to 75 MT by 2030. Out of 11 CCS projects proposed as part of the plan, only Shell’s Quest plant proceeded with commercial operations beginning in 2015. Unfortunately, Quest has so far only succeeded in negating less than one MT of emissions, while total oil sands emissions have risen by 16 MT since the CCS plant’s first full year of operations in 2016. Moreover, the net effect of CCS plants like Quest is significantly reduced due to the emissions created by capturing, compressing, and transporting the CO2.
The tar sands industry and the Alberta government have been advocating CCS as the solution to allow the continued expansion of tar sands operations while reducing overall operational emissions. The Pathways Alliance is a coalition formed in 2021 by the six largest oil sands producers: Canadian Natural Resources Limited, Cenovus Energy, ConocoPhillips Canada, Imperial Oil, MEG Energy, and Suncor Energy, which together account for 95% of Canada’s tar sands production. The alliance is proposing a new 400 km-long CO2 transportation line that would link 20 CCS plants with a storage hub in the northeast of the province. Greenpeace and other environmental organisations oppose these plans, describing them as non-transformative and a government-subsidised scheme to continue with a high-carbon business-as-usual.
2-for-1 deal on CO2
Thanks to its agreement with the Alberta government, Shell has been able to sell two-tonne carbon credits for every tonne of CO2 it effectively extracts. The proceeds from these phantom credits, coupled with ongoing generous government subsidies have been instrumental in enabling the company to operate its Quest facility at a profit. Keith Stewart, Greenpeace Canada’s Senior Energy Strategist and author of the Selling Hot Air report is calling for urgent reform: “Selling emissions credits for reductions that never happened is the worst kind of hot air, because it literally makes climate change worse. The false promises and phantom emissions surrounding this project are a powerful illustration of why Canada needs a legislated cap on greenhouse gas emissions from the oil and gas sector.”
While popular with the fossil fuel industry as convenient climate change measures, neither carbon offsetting nor CCS have convinced experts of their efficacy and viability. The International Energy Agency (IEA) has formally concluded that they cannot be considered core solutions, and that only a phase down of production can address the crisis. Shell’s double counting is not breaking any rules thanks to the agreement of the Alberta governments, but Greenpeace’s Stewart argues that this does not justify it: “This was all legal, but that doesn’t make it right. Those who have polluted and profited the most must be held accountable. We need oil companies to start phasing down production, while financially supporting the most vulnerable people, communities, and countries in their transition to clean, renewable energy.”
