Patrick Boyle On Finance Shell's Fake Carbon Credit Scandal Explained!
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May 12, 2024 Explore the controversy of Shell selling fake carbon credits, the financial aspects of carbon capture projects, challenges of quantifying carbon credits, discussing externalities and the Coase Theorem in economics, and navigating complexities in carbon markets.
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Double Counting At Quest Carbon Capture
- Shell's Quest CCS project captured CO2 but Alberta allowed Shell to register double the credits for 2015–2021.
- Greenpeace calls these extra credits 'phantom' because they overstated real CO2 removal and subsidized oil extraction.
Cost Mismatch Drives Subsidy Dependence
- Carbon capture costs vary widely, and Quest's capture cost was $168 per ton versus average credit prices around $50.
- The economics required subsidies or extra credits to make the facility viable, creating perverse incentives.
How South Pole Began Selling Offsets
- South Pole started by selling offsets for conference flights and used proceeds to install solar heaters at a university.
- The founders then scaled the business into a major carbon-credit developer and marketplace player.