Shell Plc has walked back its once-ambitious plans to develop millions of carbon offsets projects around the world. , Photographer: Krisztian Bocsi/Bloomberg
The pullback reflects both Sawan’s renewed commitment to the oil-and-gas business that generates most of Shell’s profits, and an admission that the prior goals were simply unattainable. Over the past two years, Shell barely made a dent. It spent $95 million, less than half of its initial budget, to build or invest in a portfolio of carbon projects from Western Africa to the Brazilian Amazon to Australian farmlands.
Flora Ji, a 17-year Shell veteran, has run the company’s “nature-based solutions” operations since 2021. In an interview before Sawan scrapped the official, 120 million-offsets-per-year target, she said everyone knew it was a big number, a reach. Meanwhile, the carbon market hadn’t expanded rapidly enough to meet rising demand, she said. “It didn't have that kind of huge, exponential growth we expected.
“The only way to ensure you have sufficient supply of credits of the right quality at the right time and at an acceptable price is to have an in-house team and build your own supply pipeline,” said Anaïs Bach, former head of operations for TotalEnergies SE’s nature-based solutions business who now runs a carbon-focused startup. “This is more pressing for oil companies as there’s an underlying fear that carbon projects will be reluctant to work with them in the future.
“The level of that investigation reassured me that they were taking ethics and compliance very, very seriously,” said John Herbohn, director of the Tropical Forests and People Research Centre at USC and the coordinator for Project Tarsier. “That just sent to me a message that they were serious about doing things right.”
Shell’s Ji is not oblivious to these tensions. She said that nature-based projects can take anywhere between three to seven years to start issuing credits, depending on the underlying methodologies for carbon measurement. “We are probably one of the first to make an investment commitment to directly invest into nature-based projects as a private company in this arena,” Ji said. “Over time we learned all the challenges associated with that.”
Shell has also walked away from promising projects, even those that promised to quickly supply tens of millions of credits. It considered — and ultimately declined to take — a 38% stake in the Delta Blue Carbon project, a mangrove restoration effort in Pakistan that covers an area twice the size of London. The fundamentals were sound, Shell said, but it had concerns about the integrity of its local partners and the origins of the rights to the land.
For Native’s part, chief executive officer Jeff Bernicke said it terminated discussions with Shell because “there was not a fit between their plan and Native's goals and values.” There was also a concern that the credits would be used to label fossil-fuels as carbon-neutral. A spokesman for Shell said the company has a robust due diligence process and it does not comment on specific projects or the contractual agreements.