Royal Dutch Shell and other oil majors are facing increasing shareholder pressure to tackle global warming and hit clean-energy targets outlined in the 2015 Paris climate accord. Shell photo.
Royal Dutch Shell offering packages to European customers
Royal Dutch Shell is packaging natural gas with credits for eco-friendly projects that offset pollution from the fossil fuel in an effort to market some of its natural gas as clean energy.
According to Bloomberg, the company offering its business customers in Europe a combination of gas and certificates that show emissions are offset with financing for carbon-reduction projects.
David Wells, head of Shell Energy Europe says the company is testing its markets in Germany, Italy, Spain and Britain to gauge demand for which credits to use.
The move signals that global oil majors like Shell are looking to adapt their policies to tightening environmental rules and decisions by policy makers worldwide to introduce legislation to cut greenhouse gases.
While natural gas is the cleanest burning fossil fuel, it still produces carbon dioxide. According to a study by NASA, the Earth’s temperature ultimately depends on the atmospheric level of carbon dioxide.
Under Shell’s plan, selling pollution offsets with natural gas would mean the company is “neutralizing” the impact of the fuel on the climate.
“Most companies are fairly early in the sustainability journey, so there’s a huge amount of interest” from potential customers, Wells told Bloomberg. “The point of transaction may be a little bit further down the track.”
Other oil majors are joining Shell to cut the carbon footprint of their fuels.
In its Target Neutral project, BP has invested in emission-reduction projects around the world to make up for emissions in its production of products from lubricants to acids. So far, BP reports it has offset 3 million tons of carbon dioxide since 2006 which is the same as taking 1.3 million cars off UK roads for one year.
At France’s Total, its Ecosolutions program focusses on improving development, production and marketing of its products. The company said in November that it had cut 8 MM tons of emissions since 2009 under Ecosolutions. Last year alone, it saved 1.9 MM tons.
This pivot comes at a time when oil companies are under increasing pressure from shareholders to address global warming and recognize the need to shift their business plans and hit clean-energy targets identified in the Paris climate accord.
At this time, it is unclear how oil and gas products can be offset by selling these emission credits as countries signed on to the Paris agreement have not yet decided rules under the deal.
Wells says Shell’s emission-reduction credits will be verified by firms outside the company.
Shell spokeswoman Sally Donaldson told Bloomberg that Shell already “has access” to offsets from the Reducing Emissions from Deforestation and Forest Degradation program, or REDD+.
“Deforestation schemes are the most obvious ones,” Wells said. “This is a voluntary offset, so it has to be something that resonates with the customer. That’s still a work in progress.”