Shell sold millions of carbon credits for carbon that was never captured, report finds | CBC News

Sustainable Development Goals (SDGs) and Shell’s Carbon Credits

Shell sold millions of carbon credits for reductions in greenhouse gas emissions that never happened, allowing the company to turn a profit on its fledgling carbon capture and storage project, according to a new report by Greenpeace Canada.

Background

Under an agreement with the Alberta government, Shell was awarded two tonnes’ worth of emissions reduction credits for each tonne of carbon it actually captured and stored underground at its Quest plant, near Edmonton. This took place between 2015 and 2021 through a subsidy program for carbon, capture, utilisation and storage projects (CCUS), which are championed by the oil and gas sector as a way to cut its greenhouse gas emissions. At the time, Quest was the only operational CCUS facility in Alberta. The subsidy program ended in 2022.

Phantom Credits and Hidden Subsidies

During this period, Shell was able to sell 5.7 million tonnes of what Greenpeace describes as “phantom” credits, making more than $200 million for the company. These credits were sold to other oilsands companies on the Alberta carbon market, Greenpeace alleged. Such sales would not have been illegal, but amounted to a “hidden subsidy” within the program which undercut the effectiveness of industrial carbon pricing, says Keith Stewart, senior energy strategist at Greenpeace and the author of the report.

Government Funding and CO2 Storage

Shell has received $777 million from the federal and provincial governments and $406 million in revenue from carbon offsets, according to company records cited by Greenpeace. In all, taxpayer funding has covered 93 per cent of the costs of Shell’s Quest project to date, Greenpeace said. Since 2015, the Quest project has stored nine million tonnes of CO2. (By comparison, emissions from the oil and gas sector totaled just over 158 million tonnes in 2022, the most recent federal data available.)

Government Response and Criticisms

Ryan Fournier, a spokesperson for Alberta’s Environment Minister Rebecca Schulz, said the report is a “smear job by Greenpeace.” Fournier acknowledged in an email that the Alberta government previously offered “important credits to help accelerate CCUS development.” But he described the program as a “targeted incentive to help drive CCUS investments at a time when this was still an unproven technology.”

In response to the report, Shell Canada spokesperson Stephen Doolan said carbon capture technology is critical to achieving international climate targets. He said that as “a result of innovative fiscal and regulatory frameworks, nine million tonnes of CO2 have been captured at Shell’s Quest facility that would have otherwise been released into the atmosphere.” Neither the province nor Shell denied the sale of the extra credits.

Subsidies and the Economic Viability of CCUS

Pierre-Olivier Pineau, a professor and researcher in energy policy at HEC Montreal, said the Greenpeace report illustrates “a key underlying problem” for carbon capture and storage, that “the economic environment isn’t yet there to make them sound business.” “It has to rely on subsidies, which become problematic because the government ends up subsidizing polluters,” he said, adding that it also shows the need for a higher price on carbon. “CCUS can only be correctly incentivized through a [higher] penalty on carbon emission,” he said. Without a sufficiently high price, Pineau says CCUS projects will be canceled because “they are not as profitable as dumping CO2 straight into the atmosphere” — unless, as in the case of Shell, they are heavily subsidized, he said.

Future Outlook and Emissions Reductions

Federal data released last week found Alberta was lagging behind other provinces in terms of emissions reductions, with the oil and gas sector still the largest contributor to greenhouse gas emissions. A spokesperson for Natural Resources Minister Jonathan Wilkinson said “the oil and gas sector needs to move forward on achieving reductions in absolute emissions.” In reference to the Greenpeace report, Svonkin noted that the federal government updated its national carbon pricing benchmark in 2021 “to ensure all provincial and territorial pricing systems are comparable in terms of stringency and effectiveness.” “This put an end to processes that could have rewarded industry for emissions reductions that are not real,” the statement said. The federal government is expected to announce details for its emissions cap on the oil and gas sector in the coming months. Stewart said he wants to make sure there aren’t similar “loopholes built into it in obscure ways that undercut the effectiveness of the policy.”

SDGs, Targets, and Indicators

1. SDG 13: Climate Action

   • Target 13.2: Integrate climate change measures into national policies, strategies, and planning
   • Target 13.3: Improve education, awareness-raising, and human and institutional capacity on climate change mitigation, adaptation, impact reduction, and early warning
   • Target 13.4: Implement the commitment undertaken by developed-country parties to the United Nations Framework Convention on Climate Change to a goal of mobilizing jointly $100 billion annually by 2020 from all sources to address the needs of developing countries in the context of meaningful mitigation actions and transparency on implementation and fully operationalize the Green Climate Fund through its capitalization as soon as possible
   • Indicator 13.2.1: Number of countries that have integrated mitigation, adaptation, impact reduction, and early warning into primary, secondary, and tertiary curricula
   • Indicator 13.3.1: Number of countries that have communicated the strengthening of institutional, systemic, and individual capacity-building to implement adaptation, mitigation, and technology transfer

2. SDG 17: Partnerships for the Goals

   • Target 17.16: Enhance the global partnership for sustainable development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology, and financial resources to support the achievement of the sustainable development goals in all countries, in particular developing countries
   • Indicator 17.16.1: Number of countries reporting progress in multi-stakeholder development effectiveness monitoring frameworks that support the achievement of the sustainable development goals

Table: SDGs, Targets, and Indicators

Analysis

1. The SDGs addressed or connected to the issues highlighted in the article are SDG 13: Climate Action and SDG 17: Partnerships for the Goals. The article discusses the issue of carbon capture and storage projects and their impact on greenhouse gas emissions, which aligns with SDG 13. It also mentions the need for partnerships and collaboration to achieve sustainable development goals, which aligns with SDG 17.

2. The specific targets under SDG 13 that can be identified based on the article’s content are Target 13.2: Integrate climate change measures into national policies, strategies, and planning, Target 13.3: Improve education, awareness-raising, and human and institutional capacity on climate change mitigation, adaptation, impact reduction, and early warning, and Target 13.4: Implement the commitment undertaken by developed-country parties to the United Nations Framework Convention on Climate Change to a goal of mobilizing jointly $100 billion annually by 2020 from all sources to address the needs of developing countries in the context of meaningful mitigation actions and transparency on implementation and fully operationalize the Green Climate Fund through its capitalization as soon as possible.

3. The article mentions indicators that can be used to measure progress towards the identified targets. Indicator 13.2.1 measures the number of countries that have integrated mitigation, adaptation, impact reduction, and early warning into primary, secondary, and tertiary curricula. Indicator 13.3.1 measures the number of countries that have communicated the strengthening of institutional, systemic, and individual capacity-building to implement adaptation, mitigation, and technology transfer. Indicator 17.16.1 measures the number of countries reporting progress in multi-stakeholder development effectiveness monitoring frameworks that support the achievement of the sustainable development goals.

The findings from analyzing the article can be presented in the following table:

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Fuente: cbc.ca

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