Chapter 1: Understanding Carbon Offsetting

The efficacy of carbon offsetting is a complex issue. Recent findings reveal that Chevron, a major oil corporation, has been utilizing ineffective carbon offsets to fulfill its dubious climate commitments. Alarmingly, some of these offsets may even exacerbate climate issues. This revelation is hardly surprising given the extensive greenwashing tactics employed by this ethically questionable multi-billion dollar entity. It raises crucial questions: do carbon offsets genuinely work? Can they truly assist a company in achieving net-zero emissions? Or should we remain skeptical of carbon offsetting as a whole?

Chevron is indeed a colossal oil corporation, ranking as the second largest in the United States, with annual profits exceeding $35 billion. This prominence has placed them under scrutiny as the urgency for climate action escalates. In response, Chevron has expressed its "aspiration" to reach net-zero upstream emissions by 2050.

However, rather than transitioning to carbon-neutral energy sources, Chevron is opting to purchase carbon credits to mitigate the emissions from its oil operations. A report from Corporate Accountability, a non-profit watchdog, highlighted that 93% of the 5.8 million carbon credits Chevron acquired between 2020 and 2022 were so environmentally deficient that they have virtually no value.

To illustrate, a carbon credit is intended to counterbalance one tonne of carbon dioxide emitted into the atmosphere. Between 2020 and 2022, Chevron aimed to offset 5.8 million tonnes of carbon dioxide. For perspective, in 2021, Chevron's total carbon footprint was approximately 697 million tonnes. This implies that Chevron is only offsetting about 0.43% of its emissions, indicating a significant gap in meeting its climate goals.

Yet, not all carbon credits hold the same value. For instance, Climeworks, a company specializing in Direct Air Capture (DAC) and storage, sells carbon credits derived from its technology that extracts carbon dioxide from the atmosphere and securely stores it underground. Their method is straightforward to quantify and has undergone rigorous third-party verification, ensuring that each carbon credit genuinely offsets a tonne of carbon dioxide.

However, verified carbon credits like those from Climeworks come with a hefty price tag—around $1,300 per tonne (with discounts for bulk orders). This high cost has led to a surge of cheaper, less credible carbon credits flooding the market, including those linked to forest conservation or renewable energy projects, which prevent future emissions without actively reducing existing atmospheric carbon. These are the types of credits that Chevron is primarily acquiring.

But why are these credits deemed nearly worthless? The answer lies in their lack of integrity. For example, protecting a rainforest or investing in a renewable energy initiative prevents potential future emissions but does not actively decrease the current carbon dioxide levels in the atmosphere. Furthermore, many of these initiatives are progressing independently of carbon credit transactions, as the affordability of green energy and the health of vital ecosystems are critical for human survival.

Additionally, some of these projects are questionable. A significant portion of Chevron's green energy credits comes from hydroelectric dams, which can have detrimental effects on local environments, causing droughts and floods. Many forest protection efforts that monetize carbon credits have faced criticism for marginalizing indigenous communities, often leading to negative ecological and humanitarian consequences. Consequently, some of Chevron’s carbon credits may inflict more harm than good.

Measuring the actual carbon offset of these credits is also a daunting task. Rainforest protection projects often compare their protected areas to nearby unprotected regions to estimate their offsets, but this method is prone to exaggeration and selective data interpretation. Similarly, when funding renewable energy projects, determining baseline carbon emissions is complex, given the constantly evolving energy mix. As a result, the claimed offset amounts can be significantly overstated, with the actual reductions being far less.

As a result, numerous organizations, including Corporate Accountability and the United Nations, deem these types of carbon credits unreliable for genuine offsetting due to their potential for misleading claims and facilitating rampant greenwashing—precisely what we observe with Chevron.

But is there a way for carbon credits to work effectively? Yes, but not in the manner currently employed by companies like Chevron. If Chevron were to utilize more reliable DAC-based carbon credits for its downstream emissions to achieve net-zero status, it would face a monumental challenge. Currently, the capacity to capture its staggering 697 million tonnes of annual emissions via DAC technology does not exist. Assuming this issue is resolved, bulk purchases could lower prices—consider the recent $20 million deal between J.P. Morgan and Climeworks to offset 25,000 tonnes of carbon dioxide, which equates to $800 per credit. To offset its total emissions, Chevron would need to invest around $530 billion—15 times its annual profits!

Essentially, verifiable and trustworthy carbon credits will never be affordable enough to facilitate a net-zero oil industry. The only potential solution would involve passing these costs onto consumers, potentially driving fuel prices above $15 per gallon. This disparity arises because fossil fuels have a low value-to-emissions ratio, whereas sectors like data processing—exemplified by J.P. Morgan—possess a high value-to-emissions ratio, allowing them to offset their emissions more feasibly.

In conclusion, Chevron's ambitions of achieving net-zero emissions by 2050 through carbon offsetting seem more like greenwashing or a misguided fantasy. However, industries capable of investing in high-quality DAC-derived carbon credits can still utilize offsets to attain verifiable net-zero emissions. Thus, while carbon offsetting can work, it is only viable for certain sectors and only if high-quality credits are utilized. Unfortunately, there is no regulatory framework preventing corporations from purchasing low-quality credits and falsely claiming emission offsets or carbon neutrality. Therefore, it is crucial to remain vigilant and skeptical of any carbon offsetting initiatives.

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Originally published on Planet Earth & Beyond

Chapter 2: The Reality of Carbon Offsetting

The first video titled "Carbon Offsets Don't Work. Here's Why" delves into the shortcomings and controversies surrounding carbon offsetting, shedding light on why many experts believe these measures are often ineffective.

The second video, "Do carbon offsets even work? | All Hail The Planet," explores whether carbon offsetting can truly contribute to sustainability efforts and discusses the complexities involved in these schemes.