Shell has avoided paying compensation for nearly 2 million sham carbon credits it supported in China, as registry Verra has been unable to hold the world’s largest offsets buyer to account for the scandal.
Verra told Climate Home the case is “unprecedented”, but it raises questions over the leading carbon standard’s ability to enforce its rules and guarantee integrity in the ailing voluntary carbon market – especially when critical decisions concern a dominant player like Shell.
The energy giant was closely involved in ten carbon offsetting programmes that aimed to slash methane gas released from rice paddies across eastern China. But, as Climate Home previously revealed, the carbon credits – which Shell partly used to justify sales of “carbon neutral” liquefied natural gas (LNG) – failed to cut planet-heating emissions as claimed.
After identifying serious issues and cancelling the projects in late August 2024, Verra informed a Shell subsidiary in China that the meaningless credits would need to be compensated.
So far, however, the carbon standard has been unable to claw back any of the 1.8 million credits generated by the ten projects, which were primarily used by Shell to offset real greenhouse gas emissions created by its vast fossil fuel operations. 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.
Hit-and-run
While the projects were originally set up by a small Chinese agritech firm called Hefei Luyu, Shell acted as their “authorised representative” in dealings with Verra, assuming “all applicable rights and responsibilities” equivalent to those of the project developer. Climate Home understands that both Hefei Luyu and Shell should have been on the hook for paying back the over-issued credits.
One of the agreements between Hefei Luyu and Shell
But on September 11 last year – less than two weeks after Verra’s compensation order – Hefei Luyu and Shell ended their agreement, enabling the fossil fuel multinational to abruptly abandon the projects.
Verra told Climate Home that “any business arrangements between the representative and the project proponent fall outside Verra’s purview to oversee or enforce”.
Commenting on the case, Danny Cullenward, a lawyer and climate economist at the University of Pennsylvania, said exiting the agreement does not relieve Shell of its past obligations. Those include being responsible for any potentially “false, fraudulent or misleading statements” made to Verra in the course of Shell’s work as the proxy project proponent, added Cullenward who analysed the project documents.
But, as yet, Verra has taken no action against Shell. In contrast, the carbon credit registry sanctioned Hefei Luyu after the Chinese company failed to reply to Verra’s emails and compensate for the credits. Hefei Luyu cannot hold an account on the platform or register new projects until compensation is delivered.
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Verra told Climate Home there is nothing more it can do against the Chinese firm, but added that it reserves the right to take further action in line with its rules, without providing further details on the potential measures. The registry has so far obtained compensation for 480,000 credits issued by other rice farming projects, unrelated to the Shell ones.
Cullenward said Verra had failed to explain why it cannot hold Shell accountable for the cancelled projects in China.
“If something in Verra’s internal rules prevents this outcome, Verra should identify and fix the loophole,” he added. “Otherwise it is practically begging to be defrauded in the future.”
Cullenward suggested that, even if Verra’s own rules prevent it from taking action in its registry system, the organisation could bring legal proceedings against Shell.
‘Rampant conflicts of interest’
Cullenward said the situation also illustrates the “rampant conflicts of interest inherent to unregulated carbon markets”.
Verra oversees carbon projects’ adherence to its rules, and has the power to suspend or cancel them – but it also relies heavily on the continued generation of new carbon credits to sustain its operations. Verra earns the vast majority of its income – close to 80% in 2023 – from charging a levy on each credit issued by its certified projects.
Shell is a dominant force in the carbon credit market, relying heavily on offsets to reach its climate targets to reduce emissions from its oil and gas operations. The energy company used 14.5 million credits in 2024 – nearly three times more than the second-largest buyer, Microsoft – according to data provider Allied Offsets.
“When they crack down on problematic practices, they hurt their own business prospects,” said Cullenward.
Shell announced on Thursday it had raised dividends paid to shareholders, despite a drop in profits in the fourth quarter of last year. At the same time, the firm has cut back investment in its clean energy division, which in 2024 amounted to seven times less than spending on oil and gas, according to analysis by campaigners at Global Witness.
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 [carbon] projects during their recent review” and indicated it would “continue to work closely with Verra to understand the impact of their findings”.
A Verra spokesperson told Climate Home that its system is working, as “Verra identified the issues with the projects and is following its quality control procedures to address them, including holding parties accountable for where they failed to conform to program rules and follow through on compensation”.
Verra is committed to “continual improvement” – and lessons learned from this case have been incorporated into “procedures that will substantially reduce the risk of these issues being repeated going forward”, the spokesperson added.
(Reporting by Matteo Civillini; editing by Megan Rowling)
The post Shell dodges paying compensation for sham carbon credits in China appeared first on Climate Home News.
Shell dodges paying compensation for sham carbon credits in China
The case shows that climate change is a fundamental human rights violation—and the victory of Bonaire, a Dutch territory, could open the door for similar lawsuits globally.
From our collaborating partner Living on Earth, public radio’s environmental news magazine, an interview by Paloma Beltran with Greenpeace Netherlands campaigner Eefje de Kroon.
A Tiny Caribbean Island Sued the Netherlands Over Climate Change, and Won
Climate Change
Greenpeace organisations to appeal USD $345 million court judgment in Energy Transfer’s intimidation lawsuit
SYDNEY, Saturday 28 February 2026 — Greenpeace International and Greenpeace organisations in the US announce they will seek a new trial and, if necessary, appeal the decision with the North Dakota Supreme Court following a North Dakota District Court judgment today awarding Energy Transfer (ET) USD $345 million.
ET’s SLAPP suit remains a blatant attempt to silence free speech, erase Indigenous leadership of the Standing Rock movement, and punish solidarity with peaceful resistance to the Dakota Access Pipeline. Greenpeace International will also continue to seek damages for ET’s bullying lawsuits under EU anti-SLAPP legislation in the Netherlands.
Mads Christensen, Greenpeace International Executive Director said: “Energy Transfer’s attempts to silence us are failing. Greenpeace International will continue to resist intimidation tactics. We will not be silenced. We will only get louder, joining our voices to those of our allies all around the world against the corporate polluters and billionaire oligarchs who prioritise profits over people and the planet.
“With hard-won freedoms under threat and the climate crisis accelerating, the stakes of this legal fight couldn’t be higher. Through appeals in the US and Greenpeace International’s groundbreaking anti-SLAPP case in the Netherlands, we are exploring every option to hold Energy Transfer accountable for multiple abusive lawsuits and show all power-hungry bullies that their attacks will only result in a stronger people-powered movement.”
The Court’s final judgment today rejects some of the jury verdict delivered in March 2025, but still awards hundreds of millions of dollars to ET without a sound basis in law. The Greenpeace defendants will continue to press their arguments that the US Constitution does not allow liability here, that ET did not present evidence to support its claims, that the Court admitted inflammatory and irrelevant evidence at trial and excluded other evidence supporting the defense, and that the jury pool in Mandan could not be impartial.[1][2]
ET’s back-to-back lawsuits against Greenpeace International and the US organisations Greenpeace USA (Greenpeace Inc.) and Greenpeace Fund are clear-cut examples of SLAPPs — lawsuits attempting to bury nonprofits and activists in legal fees, push them towards bankruptcy and ultimately silence dissent.[3] Greenpeace International, which is based in the Netherlands, is pursuing justice in Europe, with a suit against ET under Dutch law and the European Union’s new anti-SLAPP directive, a landmark test of the new legislation which could help set a powerful precedent against corporate bullying.[4]
Kate Smolski, Program Director at Greenpeace Australia Pacific, said: “This is part of a worrying trend globally: fossil fuel corporations are increasingly using litigation to attack and silence ordinary people and groups using the law to challenge their polluting operations — and we’re not immune to these tactics here in Australia.
“Rulings like this have a chilling effect on democracy and public interest litigation — we must unite against these silencing tactics as bad for Australians and bad for our democracy. Our movement is stronger than any corporate bully, and grows even stronger when under attack.”
Energy Transfer’s SLAPPs are part of a wave of abusive lawsuits filed by Big Oil companies like Shell, Total, and ENI against Greenpeace entities in recent years.[3] A couple of these cases have been successfully stopped in their tracks. This includes Greenpeace France successfully defeating TotalEnergies’ SLAPP on 28 March 2024, and Greenpeace UK and Greenpeace International forcing Shell to back down from its SLAPP on 10 December 2024.
-ENDS-
Images available in Greenpeace Media Library
Notes:
[1] The judgment entered by North Dakota District Court Judge Gion follows a jury verdict finding Greenpeace entities liable for more than US$660 million on March 19, 2025. Judge Gion subsequently threw out several items from the jury’s verdict, reducing the total damages to approximately US$345 million.
[2] Public statements from the independent Trial Monitoring Committee
[3] Energy Transfer’s first lawsuit was filed in federal court in 2017 under the RICO Act – the Racketeer Influenced and Corrupt Organizations Act, a US federal statute designed to prosecute mob activity. The case was dismissed in 2019, with the judge stating the evidence fell “far short” of what was needed to establish a RICO enterprise. The federal court did not decide on Energy Transfer’s claims based on state law, so Energy Transfer promptly filed a new case in a North Dakota state court with these and other state law claims.
[4] Greenpeace International sent a Notice of Liability to Energy Transfer on 23 July 2024, informing the pipeline giant of Greenpeace International’s intention to bring an anti-SLAPP lawsuit against the company in a Dutch Court. After Energy Transfer declined to accept liability on multiple occasions (September 2024, December 2024), Greenpeace International initiated the first test of the European Union’s anti-SLAPP Directive on 11 February 2025 by filing a lawsuit in Dutch court against Energy Transfer. The case was officially registered in the docket of the Court of Amsterdam on 2 July, 2025. Greenpeace International seeks to recover all damages and costs it has suffered as a result of Energy Transfers’s back-to-back, abusive lawsuits demanding hundreds of millions of dollars from Greenpeace International and the Greenpeace organisations in the US. The next hearing in the Court of Amsterdam is scheduled for 16 April, 2026.
Media contact:
Kate O’Callaghan on 0406 231 892 or kate.ocallaghan@greenpeace.org
The Trump administration’s relentless rollback of public health and environmental protections has allowed widespread toxic exposures to flourish, warn experts who helped implement safeguards now under assault.
In a new report that outlines a dozen high-risk pollutants given new life thanks to weakened, delayed or rescinded regulations, the Environmental Protection Network, a nonprofit, nonpartisan group of hundreds of former Environmental Protection Agency staff, warns that the EPA under President Donald Trump has abandoned the agency’s core mission of protecting people and the environment from preventable toxic exposures.
Former EPA Staff Detail Expanding Pollution Risks Under Trump
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Greenpeace organisations to appeal USD $345 million court judgment in Energy Transfer’s intimidation lawsuit
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