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Since 2022, Shell has sold more than 20 cargoes of liquefied natural gas (LNG) as “carbon neutral” under a new industry-led standard. Climate Home News and Dialogue Earth can now reveal that this scheme has relied in part on “phantom” carbon credits that failed to cut emissions as claimed.

The energy giant shipped the fossil fuel to buyers in East Asia and beyond, some of whom in turn pitched the gas as a “net zero solution” to their customers thanks to Shell’s ‘green’ label. 

Throughout its life-cycle – from extraction through transport and final use – LNG produces vast amounts of planet-heating carbon dioxide and methane emissions. But, using nearly 5 million carbon credits, Shell claimed to have cancelled out – on paper – the total carbon footprint of at least 23 of its LNG shipments delivered up to the end of 2023. 

The projects propping up the oil and gas giant’s “carbon neutral” marketing drive included six that claimed to slash releases of methane gas from rice paddies across eastern China. 

The emissions – purportedly avoided by introducing an improved crop irrigation method in the region – were meant to offset an equivalent amount of greenhouse gases caused by Shell’s LNG operations. 

But earlier this year it became clear that the rice cultivation projects had not delivered the promised climate benefits. Leading carbon credit registry Verra axed them – along with 31 other similar schemes – in August after finding a string of failures in their implementation. 

Now, new evidence gathered by Climate Home and Dialogue Earth casts serious doubt on whether any emissions-cutting activities were carried out on the ground at all.

Shell used phantom carbon credits to greenwash carbon neutral LNG

Chinese local authorities meant to have played a crucial role in the schemes either denied their involvement or said no such efforts had taken place, according to statements made in response to disclosure requests submitted by a risk analysis firm and seen by Climate Home. 

In addition, Dialogue Earth interviewed three rice farmers based in some of the project areas in China who said they had never heard of the carbon offset programmes and contradicted the project developers’ claims that new irrigation techniques had been rolled out there. 

Recurring scandals

The findings raise questions about Verra’s broader ability to verify claims made by offset developers and to ensure the integrity of the thousands of projects issuing carbon credits on its platform, especially as the registry cuts back its workforce

Jonathan Crook, a policy expert at Carbon Market Watch, an independent research group, said the “recurrence of such scandals in the market point to systemic and persistent issues”. 

“Clearly there’s a major problem when projects actively manipulate data, which a supposedly rigorous audit process fails to detect, thereby erroneously generating millions of phantom credits for Shell to greenwash its LNG,” he told Climate Home.


A spokesperson for Verra said it had taken “decisive action at every level at which concerns were identified” with the rice farming projects. “Verra is committed to continual improvement, particularly as we address issues arising from inappropriate conduct,” they added. 

Shell did not answer specific questions about Climate Home and Dialogue Earth’s findings in China, nor about its use of the suspect credits to deliver “carbon neutral” LNG. “We carefully source and screen the credits we purchase and retire from the market,” a spokesperson said, commenting more generally. “We’ve always been clear that carbon credits should have a verifiable carbon benefit and also deliver positive ecosystem and community impacts.”

Plan to curb methane from paddies

China’s eastern province of Anhui, a network of plains and hills traversed by the Yangtze River, is one of the country’s main rice-producing areas. Growing paddy crops provides a vital income for local farmers and strengthens the country’s food security. 

But rice cultivation also has a significant negative impact on the climate. The flooding of paddies during growing seasons encourages the formation of bacteria. As the microbes feed on the organic matter abundant in the fields, they emit vast quantities of methane – a potent greenhouse gas. 

To combat this problem, scientists came up with a relatively simple solution capable of cutting emissions by up to a half: instead of keeping the paddies flooded at all times, farmers could drain the fields periodically and, as a result, curtail the methane-releasing activity of the bacteria. 

Farmers till rice fields and transplant rice seedlings in Anqing city, Anhui province, China, June 4, 2023. In recent years, Anqing has been increasing the planting and management of high mountain varieties of rice, improving product quality, promoting farmers' income and helping rural revitalization.

Farmers till rice fields and transplant rice seedlings in Anqing city, Anhui province, China, June 4, 2023. (Photo by CFOTO/Sipa USA)

In 2017, a Chinese agricultural technology company called Hefei Luyu launched a venture to roll out this climate-friendly irrigation method across Anhui province. It partnered with Shanghai-based consultancy Libra (now known as Search CO2), an early pioneer of China’s carbon market, and together they devised a plan to sell carbon credits from at least 10 rice cultivation projects. 

Starting in late 2021, Shell got involved and gained what was described as “full agency” over the projects, becoming a broker of the credits generated by the activities after striking a series of deals with the developers. 

Climate Home first revealed Shell’s role in the rice farming schemes in March 2023, alongside their risk of generating worthless offsets due to integrity problems such as over-counting emissions reductions and questionable practices used in their development.

Farmers deny involvement

One of the projects is located in the city of Tongcheng, where farmers were informed of the benefits of intermittent flooding and of the carbon credit scheme funding the innovation, according to documents submitted by Libra in 2021 when the developers registered the projects with Verra. Over 16,000 local farmers signed up to the scheme, Libra said. 

But one farmer based in the project area told Dialogue Earth he had never heard of the carbon credit programme. He said local authorities did promote intermittent paddy flooding, alongside the rollout of a drought-resistant strain of rice, but the aim was simply to cope with limited access to water. 

”No one mentioned emissions reduction or trading ever,” the farmer said, adding that the new method had not caught on widely in the area because of the lower rice yields it produces. Climate Home and Dialogue Earth granted anonymity to the farmers interviewed for this story due to the sensitive nature of the topic. 

Experts quit carbon market watchdog in row over quality label for forest credits

In addition, the developers of the carbon credit scheme said cement ditches and reservoirs needed for the new irrigation method had been built in Tongcheng by early 2018, when the carbon crediting period started. But the farmer told Dialogue Earth that was not the case and the government hardened the channels only five years later, in 2023.

In nearby Yatan Town, which falls under a separate project linked to Shell, a different farmer said his village still uses traditional mud channels, despite the project documents claiming cement ditches were in operation there since 2017.

Government rejects developers’ claims

In all the project areas, developers including Hefei Luyu said they worked closely with local government bodies to sign up farmers to the initiative, provide training on the new irrigation technique and build key infrastructure, among other things.

Agricultural bureaus – an influential part of China’s state machinery – acted as the “main manager” in the construction phase of the different projects, according to near-identical documents submitted by Libra for the schemes. 

But, when local authorities were asked about their involvement, a very different picture emerged. Ecoptima, an AI-driven risk intelligence agency, contacted more than 70 government authorities across China after its data analysis identified anomalies with the projects.

One of the responses sent by Chinese local government authorities

In written responses obtained by Ecoptima and seen by Climate Home, some local government agencies denied their involvement in the rice cultivation projects registered with Verra, while others said they had no knowledge of them. 

Tongcheng’s Bureau of Agriculture and Rural Affairs said in July 2024 that it was “not currently included in this project, nor had authorisation been granted for the development of related enterprises”. It added that it held no records about the scheme. 

The agricultural office for Wangjiang County, which has jurisdiction over Yatan Town, said it had “not carried out carbon reduction and measurement work related to rice production, and [had] not authorised enterprises to develop” any project. 

Verra imposes sanctions

The evidence gathered by Climate Home and Dialogue Earth contrasts not only with the information supplied to Verra by the project developers, but also with assessments made by auditors responsible for verifying that the information provided is true and in compliance with the carbon standard’s rules. 

Four auditing firms greenlit a total of 37 rice cultivation projects – including the Shell-linked ones – through to February 2023, when Verra suspended the schemes and started a review after becoming aware of concerns with how the rules were being applied.

More than 200 additional Chinese rice farming projects had also sought registration with Verra, but had not completed the process before Verra took action on those that had already been approved. 

A farmer works on transplanting rice seedlings following days of heavy rainfall in China. REUTERS/Tingshu Wang

A Verra spokesperson told Climate Home that its subsequent 17-month investigation had brought to light an “unprecedented situation”. The carbon standard identified a long string of “serious issues”, including concerns about the accuracy of the baseline used to calculate emissions reductions and about the project activities claimed to have been implemented. 

Verra also found weaknesses in the audits of the projects, with the companies that carried them out unable to fully explain how they had verified “independently and objectively” the credibility of the information provided by the project proponents. 

The failures were so grave that, at the end of August this year, Verra revoked all the rice cultivation projects and announced “significant sanctions” against the project developers and the auditing firms involved. 

The Verra spokesperson told Climate Home that if the auditors do not put “sufficient plans in place to prevent recurrence of these issues”, it may suspend them from conducting audits of other projects.

“Flawed” carbon market

Commenting on the case, Chauncey Wang, co-founder of Ecoptima, said it exposes “critical weaknesses” in the current system and pointed to the failure of auditors as “symptomatic of a deeper, persistent market flaw”. 

“We’ve placed our trust in supposedly independent parties only to find that true independence is elusive in this market,” he told Climate Home. 

Wang added that Ecoptima’s investigation into the rice projects revealed implementation challenges that could have been addressed through early detection.

Verra axing of Shell’s rice-farming carbon credits in China fuels integrity fears

Lambert Schneider, research coordinator for international climate policy at Germany’s Oeko-Institut, said the “limited oversight” of auditors is a “key concern” in the voluntary carbon market. Verification bodies are currently hired and paid directly by the project developers. 

“Naturally, auditors do not want to lose their clients and this creates a conflict of interest,” Schneider told Climate Home. To tackle this, he suggested that carbon standards could themselves hire the auditors and the costs could be covered by project developers through carbon credit registration and issuance fees. 

Greenwashing Shell’s emissions

By the time Verra cancelled the Chinese rice projects, more than 1.6 million credits generated by the projects had been used to offset the equivalent of the annual CO2 emissions of four gas-powered plants, according to a calculator provided by the US Environmental Protection Agency. 

Shell emerged as the largest single user of the credits. In January, while Verra’s investigation was ongoing, the oil and gas major quietly retired over a million credits issued by the troubled projects. A carbon credit is retired when its owner declares that it has been used to mitigate emissions.

At least half of those retired credits helped prop up the company’s “carbon neutral” LNG campaign, according to a document published in June by Shell, which stated that the carbon credits “represent genuine and additional GHG [greenhouse gas] emissions reductions”. 

Laurie van der Burg, global public finance manager for advocacy group Oil Change International, said it is “misleading” to claim LNG activities are “carbon neutral” by using carbon offsets. “It is simply an act of greenwashing,” she added. 

President Biden sets US emissions goal for 2035 in the shadow of Trump

Other users of the phantom rice farming credits include Chinese state-owned fossil fuel firm PetroChina, Singapore-based DBS Bank and UK energy supplier OVO Energy. 

A spokesperson for Verra said it had requested “full compensation” from developers for “all issued credits” from the revoked projects. Some compensation has already been “completed”, they added, without giving further details. 

In response to a request for comment from Climate Home, Shell repeated a statement it first made in August, which said the company was “disappointed to learn of the issues Verra identified with these projects during their recent review” and indicated it would “continue to work closely with Verra to understand the impact of their findings”.

Industry ‘can’t be trusted’

Shell was not simply a final user of the sham credits but also had a direct stake in the projects. Starting in late 2021, the firm took on the role of “authorised representative” for the 10 schemes in Anhui, meaning it acquired all “applicable rights and responsibilities” equivalent to those of the project proponent, according to contracts seen by Climate Home. 

But, in mid-October this year, nearly two months after Verra’s decision to cancel the credits, Chinese agritech firm Hefei Luyu sent a letter to the carbon standard notifying it of the “termination” of Shell’s role in the projects.  

Shell has publicly signalled a broader intention to pull back from its direct involvement in carbon credit projects. Bloomberg reported last month that the company is looking to sell the majority of its carbon offsets business.

Failure of Busan talks exposes fossil fuel barrier to UN plastics pact

Experts told Climate Home this latest scandal further undermined the carbon market’s credibility as a way of offsetting still-rising emissions from the extraction and consumption of fossil fuels.   

Van der Burg of Oil Change said Shell had been caught out using “what in essence are fake carbon offsets” as “dangerous escape hatches” to justify the growth of its LNG business. 

“This is yet another example showing that we really cannot trust the industry to make sure that those carbon credits are actually reducing emissions, and, instead, we should force them to address their pollution at source, by curtailing their fossil fuel production and sales,” she added.

This story was published in partnership with Dialogue Earth. Additional reporting was done by Shi Yi and Yuhan Niu.

(Reporting by Matteo Civillini; editing by Sebastián Rodríguez and Megan Rowling)

The post How Shell greenwashed gas with sham Chinese carbon credits appeared first on Climate Home News.

How Shell greenwashed gas with sham Chinese carbon credits

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Big fishing nations secure last-minute seat to write rules on deep sea conservation

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As a treaty to protect the High Seas entered into force this month with backing from more than 80 countries, major fishing nations China, Japan and Brazil secured a last-minute seat at the table to negotiate the procedural rules, funding and other key issues ahead of the treaty’s first COP.

The Biodiversity Beyond National Jurisdiction (BBNJ) pact – known as the High Seas Treaty – was agreed in 2023. It is seen as key to achieving a global goal to protect at least 30% of the planet’s ecosystems by 2030, as it lays the legal foundation for creating international marine protected areas (MPAs) in the deep ocean. The high seas encompass two-thirds of the world’s ocean.

Last September, the treaty reached the key threshold of 60 national ratifications needed for it to enter into force – a number that has kept growing and currently stands at 83. In total, 145 countries have signed the pact, which indicates their intention to ratify it. The treaty formally took effect on January 17.

    “In a world of accelerating crises – climate change, biodiversity loss and pollution – the agreement fills a critical governance gap to secure a resilient and productive ocean for all,” UN Secretary-General António Guterres said in a statement.

    Julio Cordano, Chile’s director of environment, climate change and oceans, said the treaty is “one of the most important victories of our time”. He added that the Nazca and Salas y Gómez ridge – off the coast of South America in the Pacific – could be one of the first intact biodiversity hotspots to gain protection.

    Scientists have warned the ocean is losing its capacity to act as a carbon sink, as emissions and global temperatures rise. Currently, the ocean traps around 90% of the excess planetary heat building up from global warming. Marine protected areas could become a tool to restore “blue carbon sinks”, by boosting carbon absorption in the seafloor and protecting carbon-trapping organisms such as microalgae.

    Last-minute ratifications

    Countries that have ratified the BBNJ will now be bound by some of its rules, including a key provision requiring countries to carry out environmental impact assessments (EIA) for activities that could have an impact on the deep ocean’s biodiversity, such as fisheries.

    Activities that affect the ocean floor, such as deep-sea mining, will still fall under the jurisdiction of the International Seabed Authority (ISA).

    Nations are still negotiating the rules of the BBNJ’s other provisions, including creating new MPAs and sharing genetic resources from biodiversity in the deep ocean. They will meet in one last negotiating session in late March, ahead of the treaty’s first COP (conference of the parties) set to take place in late 2026 or early 2027.

    China and Japan – which are major fishing nations that operate in deep waters – ratified the BBNJ in December 2025, just as the treaty was about to enter into force. Other top fishing nations on the high seas like South Korea and Spain had already ratified the BBNJ last year.

    Power play: Can a defensive Europe stick with decarbonisation in Davos?

    Tom Pickerell, ocean programme director at the World Resources Institute (WRI), said that while the last-minute ratifications from China, Japan and Brazil were not required for the treaty’s entry into force, they were about high-seas players ensuring they have a “seat at the table”.

    “As major fishing nations and geopolitical powers, these countries recognise that upcoming BBNJ COP negotiations will shape rules affecting critical commercial sectors – from shipping and fisheries to biotechnology – and influence how governments engage with the treaty going forward,” Pickerell told Climate Home News.

    Some major Western countries – including the US, Canada, Germany and the UK – have yet to ratify the treaty and unless they do, they will be left out of drafting its procedural rules. A group of 18 environmental groups urged the UK government to ratify it quickly, saying it would be a “failure of leadership” to miss the BBNJ’s first COP.

    Finalising the rules

    Countries will meet from March 23 to April 2 for the treaty’s last “preparatory commission” (PrepCom) session in New York, which is set to draft a proposal for the treaty’s procedural rules, among them on funding processes and where the secretariat will be hosted – with current offers coming from China in the city of Xiamen, Chile’s Valparaiso and Brussels in Belgium.

    Janine Felson, a diplomat from Belize and co-chair of the “PrepCom”, told journalists in an online briefing “we’re now at a critical stage” because, with the treaty having entered into force, the preparatory commission is “pretty much a definitive moment for the agreement”.

    Felson said countries will meet to “tidy up those rules that are necessary for the conference of the parties to convene” and for states to begin implementation. The first COP will adopt the rules of engagement.

    She noted there are “some contentious issues” on whether the BBNJ should follow the structure of other international treaties such as the Convention on Biological Diversity (CBD), as well as differing opinions on how prescriptive its procedures should be.

    “While there is this tension on how far can we be held to precedent, there is also recognition that this BBNJ agreement has quite a bit to contribute in enhancing global ocean governance,” she added.

    The post Big fishing nations secure last-minute seat to write rules on deep sea conservation appeared first on Climate Home News.

    Big fishing nations secure last-minute seat to write rules on deep sea conservation

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    Climate at Davos: Energy security in the geopolitical driving seat 

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    The annual World Economic Forum got underway on Tuesday in the Swiss ski resort of Davos, providing a snowy stage for government and business leaders to opine on international affairs. With attention focused on the latest crisis – a potential US-European trade war over Greenland – climate change has slid down the agenda.

    Despite this, a number of panels are addressing issues like electric vehicles, energy security and climate science. Keep up with top takeaways from those discussions and other climate news from Davos in our bulletin, which we’ll update throughout the day.

    From oil to electrons – energy security enters a new era

    Energy crises spurred by geopolitical tensions are nothing new – remember the 1970s oil shock spurred by the embargo Arab producers slapped on countries that had supported Israel during the Yom Kippur War, leading to rocketing inflation and huge economic pain.

    But, a Davos panel on energy security heard, the situation has since changed. Oil now accounts for less than 30% of the world’s energy supply, down from more than 50% in 1973. This shift, combined with a supply glut, means oil is taking more of a back seat, according to International Energy Agency boss Fatih Birol.

    Instead, in an “age of electricity” driven by transport and technology, energy diplomacy is more focused on key elements of that supply chain, in the form of critical minerals, natural gas and the security buffer renewables can provide. That requires new thinking, Birol added.

    “Energy and geopolitics were always interwoven but I have never ever seen that the energy security risks are so multiplied,” he said. “Energy security, in my view, should be elevated to the level of national security today.”

    In this context, he noted how many countries are now seeking to generate their own energy as far as possible, including from nuclear and renewables, and when doing energy deals, they are considering not only costs but also whether they can rely on partners in the long-term.

      In the case of Europe – which saw energy prices jump after sanctions on Russian gas imports in the wake of Moscow’s invasion of Ukraine – energy security rooted in homegrown supply is a top priority, European Commission President Ursula von der Leyen said in Davos on Tuesday.

      Outlining the bloc’s “affordable energy action plan” in a keynote speech at the World Economic Forum, she emphasised that Europe is “massively investing in our energy security and independence” with interconnectors and grids based on domestically produced sources of power.

      The EU, she said, is trying to promote nuclear and renewables as much as possible “to bring down prices and cut dependencies; to put an end to price volatility, manipulation and supply shocks,” calling for a faster transition to clean energy.

      “Because homegrown, reliable, resilient and cheaper energy will drive our economic growth and deliver for Europeans and secure our independence,” she added.

      Comment – Power play: Can a defensive Europe stick with decarbonisation in Davos?

      AES boss calls for “more technical talk” on supply chains

      Earlier, the energy security panel tackled the risks related to supply chains for clean energy and electrification, which are being partly fuelled by rising demand from data centres and electric vehicles.

      The minerals and metals that are required for batteries, cables and other components are largely under the control of China, which has invested massively in extracting and processing those materials both at home and overseas. Efforts to boost energy security by breaking dependence on China will continue shaping diplomacy now and in the future, the experts noted.

      Copper – a key raw material for the energy transition – is set for a 70% increase in demand over the next 25 years, said Mike Henry, CEO of mining giant BHP, with remaining deposits now harder to exploit. Prices are on an upward trend, and this offers opportunities for Latin America, a region rich in the metal, he added.

      At ‘Davos of mining’, Saudi Arabia shapes new narrative on minerals

      Andrés Gluski, CEO of AES – which describes itself as “the largest US-based global power company”, generating and selling all kinds of energy to companies – said there is a lack of discussion about supply chains compared with ideological positioning on energy sources.

      Instead he called for “more technical talk” about boosting battery storage to smooth out electricity supply and using existing infrastructure “smarter”. While new nuclear technologies such as small modular reactors are promising, it will be at least a decade before they can be deployed effectively, he noted.

      In the meantime, with electricity demand rising rapidly, the politicisation of the debate around renewables as an energy source “makes no sense whatsoever”, he added.

      The post Climate at Davos: Energy security in the geopolitical driving seat  appeared first on Climate Home News.

      Climate at Davos: Energy security in the geopolitical driving seat 

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      A Record Wildfire Season Inspires Wyoming to Prepare for an Increasingly Fiery Future

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      As the Cowboy State faces larger and costlier blazes, scientists warn that the flames could make many of its iconic landscapes unrecognizable within decades.

      In six generations, Jake Christian’s family had never seen a fire like the one that blazed toward his ranch near Buffalo, Wyoming, late in the summer of 2024. Its flames towered a dozen feet in the air, consuming grassland at a terrifying speed and jumping a four-lane highway on its race northward.

      A Record Wildfire Season Inspires Wyoming to Prepare for an Increasingly Fiery Future

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