Shell PLC (LSE:SHEL, NYSE:SHEL) is among companies which may have purchased “worthless” carbon credits that ultimately have no impact on the environment.
Some 90% of offsets issued by Verra – the world’s largest carbon market manager – are “phantom credits” and do not actually help to reduce emissions, according to a nine-month investigation by the Guardian, Die Zeit and SourceMaterial,
Voluntary credits give companies and people the choice to buy into green projects and reduce their carbon footprint, with one credit equalling the removal of one tonne of CO2.
Verra has issued over one billion of these since it was set up in 2007, meaning companies that bought its credits would be advertising their carbon footprints under false pretences, based on the accusation.
Verra responded arguing the report was untrue, saying it worked with experts to create its method to estimate reduced emissions from its projects.
“To ensure that this work is credible and reflects scientific consensus, Verra works with academics and experts globally to create and refine methodologies,” it said.
Miner BHP PLC and easyJet PLC (LSE:EZJ) are among other companies known to have purchased Verra’s credits.
Carbon credits are a topic of heated debate, with questions being raised over their actual effectiveness in fighting climate change due to a lack of market regulation.
Businesses were also found to be over-relying on voluntary offsets to meet net zero targets in an October Climate Change Committee (CCC) report.
The report determined that real change was not taking place within these firms as a result and was “undermining the economy-wide transition” to net zero.
Around 96% of FTSE 350 listed companies have ramped up spending on offsets in the past two years, while 47% will increase this further in the next two years, according to research by start-up Kana Earth.
However, many of these have been bought overseas, raising questions about the legitimacy of the credits.
“It is vital the UK market, which is currently fragmented and lacks scale, is made more efficient and centralized,” given “so many companies [are] relying on carbon offsetting to meet their net zero emissions targets,” comment Kana founder Andy Creak.