Shell [SHEL:US], the largest oil company in Europe, has made significant changes to its corporate strategy regarding carbon offsets, as reported by Strait Times on August 31. Shell has quietly removed its carbon offset targets from its strategy. This includes withdrawing its previous commitment to spend up to USD100m per year to build a pipeline of carbon credits, which was a key element of its carbon reduction strategy aimed at achieving net-zero emissions by 2050. Additionally, Shell has canceled its plan to generate 120 million carbon credits annually by 2030 through nature-based carbon sequestration initiatives. The updated strategy emphasizes cost reduction and a renewed focus on profit-driving sectors such as oil and gas.

This shift away from carbon offset programs reflects a change in Shell’s approach to achieving its climate goals. The company’s new CEO, Wael Sawan, who assumed office in December 2022, believes that Shell can meet its emission targets without relying on carbon offsets. Instead, the company intends to adopt a more comprehensive approach that focuses on reducing operational emissions and driving innovation in low-carbon energy technologies. Furthermore, Shell’s decision to departure from carbon offsets could shake the nature-based offsets market, as the 120 million carbon credits Shell had planned for represents nearly half the size of the current annual market for nature offsets, which amounts to approximately 227.7 million metric tons of CO2 equivalent (MtCO2e).

Sources:

https://www.straitstimes.com/business/europe-s-biggest-oil-company-quietly-shelves-radical-plan-to-shrink-carbon-footprint

https://finance.yahoo.com/news/shell-shel-withdraws-100-million-113600290.html

https://www.theguardian.com/environment/2023/jan/19/shell-to-spend-450m-on-carbon-offsetting-fears-grow-credits-worthless-aoe