The sale of CO₂ credits was actually intended to help companies compensate for their own emissions. For this purpose, certificates are normally sold, the trading of which has been increasingly criticized in recent years. The oil company Shell has now registered emissions credits through a subsidy program in the Canadian province of Alberta and simply set them twice as high as the actual amount.
Doing business with Canada’s largest oil sands company
The tar sands region of Alberta is a natural resource paradise and is a significant source of large deposits of unconventional oil resources. To boost the industry, the Alberta provincial government has allowed Shell to register and sell carbon credits. The problem: Shell sold millions of carbon credits to major oil sands companies in Canada that amounted to twice the amount of emissions actually avoided by the Quest carbon capture facility. The Quest facility is a large carbon capture and storage (CCS) facility owned by Shell Canada. It was developed to separate CO2 released during the production of hydrogen gas and store it underground. The figures cover the period 2015 to 2021 and come from the register of the province of Alberta, as the Financial Times reported.
5.7 million CO2 credits sold
The subsidy was reduced over the years and expired in 2022. During these six years, Shell was able to register 5.7 million carbon credits without achieving a corresponding reduction in the reported amount of greenhouse gas emissions. One credit usually corresponds to one ton of CO2. It was sold to leading oil sands producers and their subsidiaries. The largest buyers include Chevron, Canadian Natural Resources, ConocoPhillips, Imperial Oil and Suncor Energy. According to Quest’s annual report, the total cost per ton of carbon avoided was $167.90 in 2022. By comparison, the price of a tonne of carbon emissions that major industrial emitters in Alberta had to pay in 2022 under government carbon pricing was $50 per tonne. The cost of CO₂ capture and storage at the Quest facility was three times higher than what industrial companies in the Alberta region pay for their emissions.
Criticism from Greenpeace
Big criticism of the scandal surrounding the phantom credits comes from Greenpeace Canada. “Selling carbon credits for reductions that never happened is literally making climate change worse,” said Keith Stewart, senior energy strategist at Greenpeace Canada. Shell itself said only that carbon capture “plays an important role in decarbonizing industry and sectors where emissions cannot be avoided.” The oil company wants to see additional market incentives to realize its potential in terms of decarbonization.” Alberta’s Environment Ministry says Shell’s carbon credit scandal did not result in “additional emissions” from industrial polluters.
Not the solution to all problems: carbon capture and storage
According to energy research group Wood Mackenzie, Canada has one of the most generous incentive systems for carbon capture and storage. However, the industry is still fighting for its economic viability. That’s why energy companies in Canada and around the world are pushing for greater government support for carbon capture and storage. Originally, Sheel was said to have lobbied for a three-for-one deal on carbon credits through her Quest facility. The fact is that oil and gas production releases a large amount of greenhouse gas emissions. Curbing pollution will require an “unimaginable” amount of carbon capture and storage, according to the International Energy Agency. Canada’s Minister of Energy and Natural Resources, Jonathan Wilkinson, commented on the issue: “Ultimately, the oil and gas sector, and particularly the oil sands companies, must start reducing emissions.”
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