Shell’s assertion of carbon neutrality in its liquefied natural gas (LNG) shipments has been scrutinized following revelations of reliance on dubious carbon credits.
A joint investigation by Climate Home News and Dialogue Earth has unearthed systemic issues that cast doubt on the validity of these offsets, exposing broader flaws in the carbon market and highlighting Shell’s role in what many are calling a greenwashing scandal.
The Shell Carbon Neutrality Illusion
Since 2022, Shell has marketed over 20 LNG cargoes as “carbon neutral,” claiming to offset emissions using nearly five million carbon credits. The projects behind these credits purported to reduce methane emissions from rice paddies in eastern China by promoting intermittent flooding techniques.
However, investigations revealed that many of these projects failed to deliver the promised environmental benefits. Leading carbon credit registry Verra revoked 37 rice cultivation projects, including those tied to Shell, citing “serious issues” in project implementation and data accuracy.
Local Chinese authorities denied involvement in the projects, and farmers interviewed in the affected areas reported no awareness of the carbon credit schemes.
One farmer noted, “No one mentioned emissions reduction or trading ever,” while another highlighted discrepancies in project documentation, such as claims of infrastructure improvements that had not been completed.
A Systemic Failure
Jonathan Crook, a policy expert at Carbon Market Watch, criticized the systemic issues, stating, “Clearly there’s a major problem when projects actively manipulate data, which a supposedly rigorous audit process fails to detect, thereby erroneously generating millions of phantom credits for Shell to greenwash its LNG.”
Further amplifying the controversy, Verra’s investigation revealed “serious weaknesses” in the auditing process. Verification bodies hired directly by project developers were found to lack independence, creating conflicts of interest that undermine the credibility of their assessments.
Lambert Schneider, a research coordinator at Germany’s Oeko-Institut, proposed that carbon standards should hire auditors directly to ensure impartiality, funded through project registration fees.
Shell’s Role
Shell’s involvement in these projects went beyond purchasing credits. In 2021, the company acquired “full agency” over 10 rice cultivation schemes in Anhui province, granting it significant control over their implementation. However, as evidence of the projects’ failures mounted, Shell terminated its role and has signaled plans to scale back its involvement in the carbon offsets business.
A Shell spokesperson commented, “We’ve always been clear that carbon credits should have a verifiable carbon benefit and also deliver positive ecosystem and community impacts,” but admitted disappointment over Verra’s findings.
Advocacy groups, however, argue that Shell’s actions represent a dangerous reliance on flawed offsets to justify its expanding LNG operations. Laurie van der Burg of Oil Change International called the claims “an act of greenwashing,” adding, “We cannot trust the industry to ensure these carbon credits are reducing emissions.”
The debacle raises urgent questions about the viability of carbon offsets as a solution to climate change. Experts warn that the industry’s reliance on such mechanisms risks undermining efforts to curb greenhouse gas emissions.
Chauncey Wang, co-founder of Ecoptima, described the situation as symptomatic of a “deeper, persistent market flaw,” urging early detection systems to address implementation challenges.
As public confidence in carbon markets erodes, critics emphasize the need for corporations like Shell to prioritize reducing emissions at their source. Van der Burg argued, “We should force them to address their pollution by curtailing fossil fuel production and sales.”
