Shell Nederland Raffinaderij B.V., a subsidiary of Shell, is pausing construction at its massive biofuel facility in Rotterdam. The 820,000tpa capacity site at Shell Energy and Chemicals Park will halt work temporarily to focus on other vital aspects of the company. So, what is the exact reason behind Shell’s massive decision? Will this impact its operations, global market value, and employees by large? Read and discover more…

Why did Shell take this Bold Decision?  

Explaining straightway, Wael Sawan, CEO of Shell wants to prioritize the company’s most profitable ventures, particularly in oil and gas. This approach has resulted in the company pulling out of less profitable renewable and hydrogen projects. The outcome of this decision is the temporary halt of the Rotterdam biofuels project. Shell is also conducting a thorough valuation review of this unit. The 820,000t unit was also set to produce sustainable aviation fuel (SAF), apart from renewable diesel. According to media reports, they aimed to start operations in 2025, but now it has been postponed to the end of the decade.

Another key reason for ceasing the unit is to slow down activities and reduce contractor strength for better cost control. They believe this will help optimize and streamline project sequencing. With this new amendment, Shell aims to reevaluate project delivery and maintain competitiveness in the current economic scenario.

Huibert Vigevano, Shell’s downstream head confirmed that,

“Temporarily pausing on-site construction now will allow us to assess the most commercial way forward for the project. We are committed to our target of achieving net-zero emissions by 2050, with low-carbon fuels as a key part of Shell’s strategy.”

UBS analyst Joshua Stone remarked,

“The pause was consistent with Shell’s strategy to focus on returns. The delays further highlight that the advanced biofuels market is not an easy one. The oil majors have dipped their toes and found it challenging.”

READ MORE: Shell Retired 20 Million Carbon Offsets in 2023, Weakens 2030 Climate Goal

Shell Canada Greenlights Major Carbon Emission Cut

As this news came as a shock to many, there is a silver lining for our news readers. Meanwhile, Shell Canada recently achieved the final investment decision (FID) for CCS projects, including the Polaris project and the Atlas Carbon Storage Hub, in partnership with ATCO EnPower. The media release notes that Polaris (100% Shell-owned) can reduce Scope 1 CO2 emissions at Shell’s Scotford refinery by capturing and storing up to 40% and by up to 22% at the chemicals complex. The operations are slated to begin by the end of 2028.

Moving on, Shell Eastern Trading has acquired Pavilion Energy from Carne Investments, gaining 100% control. This is another significant milestone that happened last month. Pavilion Energy, based in Singapore, operates a global LNG trading business with 6.5 mtpa of contracted supply, alongside shipping, and gas supply activities in Asia and Europe. This acquisition manifests Shell’s LNG portfolio. It also provides strategic access to key markets, increasing flexibility to meet energy security needs in Asia and Europe.

Even though it might seem uncanny for companies to halt projects in progress, Shell is not the first company to announce it. Energy giant BP recently announced a pause on two biofuel projects in Germany and the U.S.

Media agencies like the Financial Times have reported that Biofuel prices have been under downward pressure recently. This is because of reduced demand in Europe following Sweden’s biofuel mandate cut, alongside increased supplies from the U.S. However, Shell shares increased by 1.3% at 1106 GMT, showing a rise of over 12.5% this year.

Shell has a market cap or net worth of $235.01 billion. The enterprise value is $277.77 billion. As of the most recent data, Shell’s stock price in the last 5 days was $73.25 per share, as shown in the image below.

source: stockanalysis

NYSE: SHEL · IEX Real-Time Price · USD 73.25

How Shell Uses Carbon Credits to Shape the Future

Shell’s carbon credits play a crucial role in their goal to become a net-zero emissions energy business. These credits help Shell and its customers offset emissions, adhering to the mitigation hierarchy: avoid, reduce, and compensate. Notably, Shell selects projects certified by the Verified Carbon Standard, Gold Standard, and the American Carbon Registry. In the ESG sphere, the company helps generate carbon credits from nature-based projects and technologies. In 2023, Shell’s net carbon intensity (NCI) included 20 m carbon credits, with 4 m linked to energy product sales.

Shell’s Net-zero emissions by 2050 (Scope 1, 2, and 3), reported by Shell’s Energy Transition Strategy, 2024

Emissions from internal operations (Scope 1 and 2)

Halve Scope 1 and 2 emissions by 2030 (2016 baseline).
Eliminate routine flaring from Upstream operations by 2025.
Maintain methane emissions intensity below 0.2% and achieve near-zero methane emissions by 2030.

Emissions from sold products (Scope 3):

Reduce the net carbon intensity (NCI) of the energy products we sell by 9–12% by 2024, 9–13% by 2025, 15–20% by 2030, and 100% by 2050 (2016 baseline).
Ambition to reduce customer emissions from the use of our oil products by 15–20% by 2030 (Scope 3, Category 11) (2021 baseline)

Global Market Insights reports that the European biofuel market size exceeded USD 26.5 B in 2023 and is likely to register a 6.7% CAGR from 2024 to 2032, owing to the rising concerns about climate change and demand for sustainable energy sources. The European government aims to boost renewable fuels to approximately 14% of transport energy by 2030, with substantial demand. With this prediction, we can hope the future of energy giants like Shell is promising, amid the biofuel boom.

MUST READ: Shell to Buy 22,500 Biochar Removal Credits from The Next 150

The post Why Shell Hit the Brakes on New Rotterdam’s Biofuel Plant appeared first on Carbon Credits.

The market for carbon offset credits is currently facing a resurgence of criticism as more than 80 nonprofit organizations come together to oppose their use in climate strategies. These activists argue that carbon offsets undermine genuine efforts to reduce greenhouse gas emissions and call for their complete exclusion from climate regulations and guidelines.

Carbon credits, also called offsets, have been used as a tool to mitigate carbon dioxide emissions by allowing companies and governments to invest in projects that purportedly reduce or remove emissions elsewhere. This practice gained traction as part of efforts to achieve net zero emissions targets. 

Under this mechanism, entities could compensate for their emissions by funding projects like reforestation or renewable energy initiatives.

In 2023, the total volume of carbon offsets used (retired) by entities to negate their carbon emissions reached around 180 millions MtCO2e.

However, critics argue that carbon offsets do not contribute to real emission reductions. Instead, they allege that offsets allow high-emission industries and countries to continue polluting while outsourcing the responsibility for emissions reductions to other regions or sectors.

This approach, they contend, undermines the urgency and effectiveness of direct emission reductions needed to fight climate change.

Joint Statement Against Carbon Offsets

In a significant collective effort, prominent organizations including ClientEarth, ShareAction, Oxfam, Amnesty International, and Greenpeace have issued a joint statement condemning carbon offsets. They argue that relying on offsets deflects attention from the critical need to curb emissions at the source. They further claimed that it fails to mobilize adequate financial resources for climate action, especially in developing countries.

The statement emphasizes that voluntary and regulatory frameworks for climate transition planning should exclude offsetting. It challenges the notion that offsets can serve as a substitute for genuine emission reductions.

YOU MAY LIKE: Shell Retired 20 Million Carbon Offsets in 2023, Weakens 2030 Climate Goal

Controversies and Challenges

The debate over carbon offsets has intensified amid efforts to revive and normalize their use within climate finance frameworks. 

Recently, a contentious move by the Science Based Targets initiative (SBTi) to endorse the use of credits for offsetting supply chain emissions has sparked criticism. Critics argue that such endorsements undermine the credibility of emission reduction targets by allowing companies to offset their most substantial emissions sources rather than eliminating them.

Moreover, concerns persist about the reliability and accountability of carbon credits. Some studies have highlighted significant quality issues, including inflated claims about the environmental benefits of offset projects. 

Government and Institutional Responses

Despite the criticism, some governments, including the United States, have supported the integration of carbon credits into climate finance strategies. The federal government recently endorsed the use of these credits as a legitimate tool for achieving climate goals. This move signals a divergence in global perspectives on their role in emissions reduction strategies.

READ MORE: US Government Releases New Voluntary Carbon Credit Market Policy Guidelines

Additionally, prominent environmental organizations such as Conservation International, the Environmental Defense Fund, and the Nature Conservancy have backed the SBTi’s proposal to expand the use of carbon credits.

These organizations argue that well-regulated and transparent carbon markets can play a complementary role in financing emission reduction projects, particularly in sectors and regions where direct reductions are challenging or costly to achieve.

Critique of Carbon Credit Effectiveness

Critics maintain that carbon offset credits send misleading signals about the true costs and efforts required for effective climate action. Moreover, there are concerns that reliance on carbon credits could disincentivize investments in transformative technologies and infrastructure necessary for sustainable development. 

They specifically noted that:

“Carbon credits send a misleading signal about the efforts required to pursue climate action, and they undermine carbon prices by providing a false sense of the existence of ultra-cheap abatement options around the world.”

What The Data Shows About Using Carbon Offsets

On the other side of the debate, industry reports show that companies, particularly large businesses, that use carbon credits to offset their environmental footprint are more likely to achieve more in slashing their emissions. 

As shown below, data from the research by Ecosystem Marketplace, the use of voluntary carbon credits (offsets) brought these results:

Companies in the voluntary carbon market are 1.8x more likely to be actively decarbonizing year-over-year.
They are 1.3x more likely to have supplier engagement strategies, involving employees and customers in climate action.
The median voluntary credit buyer invests 3x more in emission reduction efforts within their value chain, including renewable energy consumption and RECs.

Voluntary carbon buyers are 3.4x more likely to have approved science-based climate targets.
They are 1.2x more likely to have board oversight of their climate transition plans.
Companies in this market are 3x more likely to include Scope 3 emissions in their climate targets, despite the challenges of controlling these emissions.

The debate surrounding carbon offset credits underscores broader challenges in global climate policy and finance.

While critics maintain that offsetting mechanisms divert attention and resources away from essential emission reduction efforts, proponents argue that well-regulated carbon markets can mobilize capital for climate projects and facilitate emissions reductions.

The post Will This Be The End of Carbon Offsets? appeared first on Carbon Credits.

Google has partnered strategically with BlackRock to develop a 1GW solar energy pipeline in Taiwan. In this collaboration, Google will make a significant capital investment in New Green Power, a leading solar developer in Taiwan, owned 100 % by a fund managed by BlackRock’s Climate Infrastructure business. This move aims to boost energy capacity and cut carbon emissions, especially as the demand for AI continues to rise.

A Cool Deal for Hot Energy in Data Centers

The press release notes that Taiwan is the prime hub for Google’s cloud technology with data centers and offices. Certainly, the energy demand is insane for these data centers. However, the country still relies on fossil fuels for ~ 85% of its power generation. Thus, this deal promises to meet the electricity needs of Google’s operations in Taiwan. It further aligns with its 24*7 carbon-free electricity (CFE) demand round the clock in all regions it operates.

Subsequently, Amanda Peterson Corio, Google’s Global Head of Data Center Energy highlighted,

“We’re aiming to reach net-zero emissions across our operations and value chain, supported by a goal to run on 24/7 carbon-free energy everywhere we operate. The path to reach these goals is challenging, and requires both commercial efforts and broader energy systems change. We’re excited to partner with BlackRock and New Green Power to advance the build out of clean energy on Taiwan’s electricity grid.”

source: Google

In this deal, Google has taken a stake in New Green Power to buy nearly 300 megawatts of renewable energy from BlackRock. It will be purchased through power purchase agreements (PPAs) and Taiwan Renewable Energy Certificates (T-RECS). Google and BlackRock did not disclose the size of their equity stake in NGP.

However, Amanda mentioned that the investment is expected to drive both equity and debt financing for the development of NGP’s 1-gigawatt solar pipeline.

David Giordano, Global Head of Climate Infrastructure of BlackRock noted,

“As we witness growth in demand for digital services, powered by AI and data-centric technologies, it becomes imperative to invest in the infrastructure that not only supports this growth but also aligns with our strategy to invest in clean energy. This partnership is a testament to our shared commitment to driving the transition to a low-carbon economy.”

MUST READ: Google and NV Energy: Powering Nevada’s Future with 115 MW of Geothermal Energy 

Mutual Gains with Robust Solar Capacity

Google plans to extend this clean energy capacity to its semiconductor suppliers and manufacturers. The semiconductor industry is a significant emissions hotspot due to energy-intensive chip manufacturing and operation. This deal directly supports Google’s clean energy objectives and would reduce Scope 3 supply chain emissions. The new solar capacity will directly power Google’s data centers and cloud region in Taiwan. It will also offer clean energy choices to nearby chip suppliers and manufacturers.

In 2023, Google’s Scope 3 emissions totaled ~10.8 mtCO2e, accounting for 75% of its overall carbon footprint. Some of these emissions significantly come from upgrading data center infrastructure and AI initiatives. Google has emphasized that reducing Scope 3 emissions depends on diverse suppliers across countries with varying clean energy access, posing greater challenges in the Asia-Pacific region.

Since last year Google has been investing continuously in their prime manufacturing hubs to achieve their goal of 5 GW of CFE. The tech giant aims to secure clean energy availability across its supply chain through this energy target.

New Green Power (NGP), headquartered in Taipei, is a prominent solar developer and EPC firm. It finances, builds, owns, and operates solar projects in Taiwan and Japan. It has efficiently built and managed more than 500 MW of domestic projects. These include the largest inland floating project (approximately 35 MW) and rooftop projects (around 15 MW) in Taiwan, alongside multiple utility-scale ground-mounted projects in southern Taiwan. With its strong local and international experience, NGP is taking charge of the renewable energy transformation in the region.

Speaking of the investment, it would foster Taiwan’s renewable energy grid and assist Google in achieving net-zero emissions throughout its operations and value chain by 2030.

BlackRock’s Role in Taiwan’s Energy Revolution

BlackRock’s Infrastructure Equity platform oversees over US$39B in client assets as of March 31, 2024, spanning its Climate and Diversified Infrastructure franchises. The largest asset manager company offers global investment opportunities and tailored solutions across energy sectors and asset classes. Furthermore, it leverages the significant investment potential of the energy transition valued at over US$100 trillion.

Ross Mackey, Portfolio Manager, Climate Infrastructure of BlackRock said:

“This is a pivotal moment for energy infrastructure in Taiwan. BlackRock’s Climate Infrastructure business is a leading investor in Taiwan’s solar industry and we are delighted to partner with Google to provide a scalable and sustainable energy solution for their operations in Taiwan.”

Similarly, Singapore is advocating for green data centers to manage the increasing energy demands of AI. It aims to provide at least 300 MW of additional capacity through green energy initiatives in the coming years.

This partnership represents a significant step towards sustainable energy solutions in the tech industry, promising a greener future for data centers and digital services in Taiwan.

MUST READ: BlackRock’s Insights on 2024 Low-Carbon Transition Investment Trends

Addressing Taiwan’s Energy Challenge

Taiwan leads global semiconductor production, producing nearly 60% of the world’s chips and a significant portion of advanced AI processors. However, the country heavily depends on non-renewable energy sources to sustain its industrial output.

About 97% of Taiwan’s energy comes from coal and natural gas, underscoring the urgency to shift towards renewable sources. This is the reason behind the country’s strive towards sustainable digital growth.

Taiwan aims to reach 20GW of solar capacity by 2025 and up to 80GW by 2050 to achieve its net zero goals.

Taiwan’s renewable energy future looks sunny with rapidly expanding solar developers like NGP, supported by strong partners such as BlackRock and Google. Undoubtedly, it’s a significant step towards sustainable energy solutions in data centers, digital services, and the entire tech industry.

READ MORE: US Solar Installations in Q1 2024 Surpass 100 GW Milestone 

The post Google Invests in BlackRock’s New Green Power to Boost Taiwan’s Solar Capacity appeared first on Carbon Credits.

Amazon has taken a bold step by becoming the first company to sidestep the global standard for verifying carbon offsets, a standard developed by a non-profit heavily funded by Amazon’s founder, Jeff Bezos. This move is part of Amazon’s strategy to establish a new standard, enabling it to overcome the shortage of quality-labeled offsets and meet its ambitious goal of net zero greenhouse gas emissions by 2040. 

However, this decision has raised concerns about potential market confusion and the dilution of carbon offset standards.

Redefining Carbon Offset Standards

Companies, including Amazon, purchase carbon offset credits from projects that absorb carbon, such as reforestation, to offset their emissions. Each carbon offset corresponds to a tonne of carbon dioxide reduced or removed from the atmosphere. 

Since the critic of the carbon offsets’ integrity began to scrutinize the market in 2021, the volume of these credits issued decreased. 

Despite the demand, the market for these offsets remains small due to a limited number of verifiable projects. 

To address this, Amazon has completed work on Abacus, a new framework for verifying carbon offsets, developed in partnership with carbon registry Verra. They started developing this carbon offset standard in 2022. 

This alternative standard is positioned as more ambitious than the one developed by the Integrity Council for the Voluntary Carbon Market (ICVCM). ICVCM is the largest organization dedicated to validating carbon offsets.

Amazon’s head of carbon neutralization, Jamey Mulligan, who is also the architect of Abacus, stated that while the company supports ICVCM’s work, it seeks a higher standard to ensure real and verified impacts on emissions. He did not comment on whether Jeff Bezos was directly involved in this decision. 

Other major tech companies like Alphabet, Meta, Microsoft, and Salesforce have already committed to purchasing up to 20 million metric tons of Abacus-certified credits.

However, the ICVCM has expressed concerns about the development of an alternative standard. Pedro Martins Barata, co-chair of ICVCM’s panel of experts, worries that multiple standards could lead to confusion in the market. 

Kelley Kizzier, a member of ICVCM’s board and director of corporate action at the Bezos Earth Fund, views Abacus as complementary rather than competitive to ICVCM, emphasizing the need for generating high-integrity offsets.

Meet Amazon’s “ABACUS” 

The market for voluntary carbon offsets, valued at $2 billion, remains constrained by skepticism over the effectiveness of the underlying projects. According to an Environmental Defense Fund analysis, the market currently offsets 300 million metric tons of emissions annually, but only a fraction of these offsets are verified. ICVCM’s primary quality label, CCP, covers only 27 million tons.

Last month, the organization revealed the first carbon-crediting methodologies approved for its Core Carbon Principles (CCPs) label.

READ MORE: ICVCM Reveals First CCP-Approved Carbon Credits Worth 27M

Amazon reported 71.3 million tons of carbon emissions in 2022, with the majority stemming from its supply chain. The company plans to become a significant buyer of carbon credits without substituting these credits for its broader decarbonization efforts. Amazon is evaluating over 70 proposals and aims to restore tens of thousands of hectares of degraded land.

Any developer meeting Verra’s methodology can apply for the Abacus label, which was developed with input from scientists, NGOs, and industry experts. Eron Bloomgarden, founder of Emergent, believes that while ICVCM’s work is crucial, it is insufficient for the market’s growth. He supports Abacus as it could help address major challenges like climate change and biodiversity extinction.

What Makes Abacus Different?

The new carbon credit label, Abacus, focuses on agroforestry and reforestation projects due to challenges with additionality, leakage, and durability. These projects have significant potential for climate, social, and environmental benefits.

Additionality: Abacus differs from traditional carbon credits by requiring developers to account for additionality from the project’s inception. They must track changes in carbon stock over time using a dynamic baseline, ensuring projects outcompete control plots in the surrounding landscape. This shifts the risk of non-additionality to project investors.

Leakage: Abacus aims to reduce leakage, which occurs when agricultural projects indirectly cause land-use changes and carbon loss. By supporting projects that make degraded land or nearby regions equally productive, Abacus helps maintain agricultural production rates, ensuring that carbon removal efforts do not compromise food security.

Durability: To address the issue of durability, Abacus continues using pooled buffer accounts to cover potential losses due to events like wildfires or harvests. However, it shortens the crediting period from 50 years to 30, which has minimal impact on investors’ financial outlooks. This change creates unaccredited removals that can compensate for partial losses, acting as an additional buffer pool.

In summary, Amazon’s development of the Abacus standard represents a pivotal move in the carbon offset market, aiming to enhance the supply of high-quality offsets while stirring debate about the implications for market coherence and the integrity of carbon offsetting practices.

SEE MORE: US Government Releases New Voluntary Carbon Credit Market Policy Guidelines

The post Amazon’s Own Carbon Offset Standard Sparks Concerns Over Market Confusion appeared first on Carbon Credits.