Oil and gas interests pollute the carbon crediting rulebook and invest heavily in a marketplace flush with low-quality carbon credits. An upcoming Carbon Market Watch report demonstrates how some of the world’s biggest fossil fuel companies use their oversized leverage to influence major decision-making bodies in the voluntary carbon market.
For the last three years, the world’s largest corporate buyer of carbon credits on the voluntary carbon market has been oil and gas supermajor Shell. While at first glance such a buying spree might be understood to represent climate consciousness and commitment, what is actually purchased is the illusion of meaningful environmental action bought at bargain basement prices.
The latest Carbon Market Watch report ‘Oil spill: How fossil fuel interests are seeping into the voluntary carbon market rulebook’ shows that not only are elite oil and gas companies the voluntary carbon market’s biggest customers, they are also indirectly influencing and shaping the carbon crediting rulebook, seeking to ensure that cheap and low-quality carbon credits can be traded in high volumes to misleadingly self-promote climate leadership.
The reputational dividend of carbon credits
Carbon credits feature prominently in the green and pleasant public-facing reports crafted by the oil megacompanies. They are often used to overtly greenwash fossil fuels. Despite unfounded industry claims to the contrary, there is also no evidence that buying carbon credits has any impact on accelerating corporate decarbonisation, especially for big oil which continues to walk back its climate targets.
In 2021, five of the biggest oil and gas companies – BP, Chevron, ExxonMobil, Shell and TotalEnergies – spent an estimated $750 million on marketing to present themselves as climate responsible actors. Many oil and gas companies heavily use carbon credits in sustainability reporting, net-zero targets, and public-facing campaigns to obscure the lack of ambition in their climate plans.
“The oil and gas giants exploit carbon credits for a smoke and mirrors show that allows them to distract and delay from what would really make a difference: drastically reducing their own emissions,” said report author Inigo Wyburd.”The only thing that is green is the colour of wash they apply to their reputations.”
Infiltrating the integrity bodies
When looking behind the scenes it is clear why oil and gas companies choose to conduct business on the voluntary carbon market. This unregulated space is filled with cheap low-quality carbon credits and is vulnerable to the influence of those with the deepest pockets, such as the oil and gas lobby.
Fossil fuel representatives and market operators holding deep financial interest in a business friendly and loosely regulated carbon market have, for example, successfully found a way to set themselves a seat on the governing board of the Integrity Council for the Voluntary Carbon Market (ICVCM) and on a key stakeholder forum of the Voluntary Carbon Markets Integrity Initiative (VCMI), which guide the do’s and do not’s of the marketplace.
Their presence in these influential decision-making bodies raises red flags relating to the conflict-of-interest provisions of the ICVCM and VCMI. Opening the door to such vested interests puts problematic options on the table that are good for big oil but bad for the climate, such as giving the green light to offsetting with low quality carbon credits at the expense of internal decarbonisation.
“Oil and water don’t mix. And neither should the world’s biggest polluters be allowed to muddy the carbon crediting rulebook with their greasy fingertips. It is outrageous that those with most to lose from responsible climate action and the most to gain from offsetting are allowed to help shape supposedly independent rules overseeing the quality and use of carbon credits. Initiatives like the ICVCM and VCMI must take urgent action today to exclude conflicted stakeholders from all decisionmaking roles,” stated Wyburd.
Subtle subterfuge
Our report also delves into the more discreet methods of oil and gas company influencing techniques. The brigade of companies at the heart of climate inaction are extremely active and notorious networkers. By its own admission TotalEnergies has affiliation with over 1,000 professional associations and chambers of commerce globally. Shell and Chevron publicly disclose involvement in more than 100, while other notorious operators claim interaction with 50 or more, all of which are likely even higher in reality.
Trade organisations allow fossil fuel companies to direct their punches from a distance, ducking and dodging the reputational backlash that striking out against environmentally responsible actions would provoke.
For instance, the American Petroleum Institute pushed for VCMI to recognise the oil and gas sector’s emissions as being “hard-to-abate” and to increase the quantity of Scope 3 emissions that should be eligible for offsetting. Meanwhile, the International Emissions Trading Association similarly called on VCMI to recognise big oil’s emissions as hard-to-abate and separately pushed for weaker carbon credit quality rules concerning financial additionality.
“There is a genius to the networking of oil and gas companies that allows them to exercise greater influence while hovering under the radar of major criticism,” said Wyburd. “Enough is enough. Trade associations must divulge their positions publicly, while carbon credit integrity initiatives and government bodies must tighten their rules of engagement to discount anti-climate lobbying.”
