Oil companies practice offsets to claim green barrels

In January, Occidental Petroleum announced it had completed something no other oil company had performed before: It sold a shipload of crude that it stated was 100% carbon-neutral.

While the two-million-barrel cargo to India was devised to accommodate more than a million tons of planet-warming carbon throughout its lifecycle, from well to tailpipe, the Texas-based driller stated it had wholly offset that influence by purchasing carbon credits under a U.N.-sponsored program named CORSIA.

Carbon credits are financial instruments created by projects that decrease or avert greenhouse-gas emissions, such as mass tree plantings or solar power farms. The project owners can exchange the credits to polluting companies, applying them to make parts of offsetting their carbon emissions.

Features of the Occidental transaction have not been reported beforehand. Two sources involved in the venture informed Reuters that the driller spent about $1.3 million for the credits – or nearby 65 cents per barrel. Oil currently trades for more than $60 a barrel.

Occidental and the U.N. program state such credits make the two-million-barrel cargo carbon-neutral because they serve an equivalent amount of greenhouse gas extracted from the projects’ atmosphere making the credits.

The arrangement reveals a growing trend.

Oil-and-gas companies globally are increasingly trying to market their products as cleaner using a range of questionable methods, including buying credits, powering drilling operations with renewable power, and spending on expensive and commercially unproven technology to catch and stock emissions.

The moves are intended to secure a future for the fossil fuel industry in a society where investors, activists, and regulators require action to stop climate change.

In some examples, they are also meant for profit: Companies have started seeking a premium price for what they name cleaner petroleum products.

Although carbon credits do zero to reduce the pollution from a given barrel of oil, advocates of offset programs argue that credit purchases support finance clean-energy efforts that otherwise would not be profitable.

Critics wreck such programs as smoke-and-mirrors public relations forces that allow polluters to clean their image while profiting from climate damage.

Oil company requirements of clean fuels through offsetting are like a tobacco company saying they sell nicotine-free cigarettes because they paid someone else to sell some chewing gum, stated David Turnbull, a spokesperson for Washington-based Oil Change International, an advocacy group fighting fossil fuels.