Shell purchasing 500,000 California carbon offsets
Shell, one of the largest oil producers in the world, announced that it will purchase 500,000 California carbon offsets.
The offsets will be sourced from a large Forestry project, once it has been reviewed by a certified third-party verification body.
Forestry projects offer landowners the opportunity to conserve the natural resources on their property, while still generating revenue to cover maintenance costs through the sale of carbon offset credits.
With a number of refineries in California, Shell is required to account for its annual emissions according to the state’s mandatory carbon market.
Regulated emitters are allowed to buy California carbon offsets to meet up to 8% of their compliance obligation, creating the potential demand for over 200 million California carbon offsets by 2020.
The state’s Air Resources Board has approved four project types to generate California carbon offsets-Forestry, Urban Forestry, Livestock Methane Capture, and the Destruction of Ozone Depleting Substances.
However, a study conducted by the American Carbon Registry concluded that the current supply of California carbon offsets would fall well short of demand should companies buy all the offsets they can.
Since California carbon offsets are expected to sell at a discount to state-issued carbon allowances, businesses are likely to take advantage of the cost savings.
The ARB’s February carbon auction saw all 12.9 allowances for delivery in 2013 sell at $13.62. Combined with the future sale of 2016 allowances, auction revenues totaled over $223 million to be spent on other emission reduction projects, improving air quality in disadvantaged communities, and offsetting any increases in electricity bills for average customers.