Nature-based solutions
We are investing to protect and enhance natural ecosystems that capture CO₂ emissions, benefit local communities, and improve biodiversity. We use the carbon credits these projects generate to help customers decarbonise by compensating for their emissions.
Shell's strategy is to deliver more value with less emissions. As part of this, we are working to reduce emissions from our operations while providing our customers with lower-carbon energy solutions, including biofuels, hydrogen and carbon capture and storage (CCS). Where appropriate, we also use and offer high-quality carbon credits from projects that avoid, reduce or remove emissions.
Nature-based projects play an important role in this approach. We purchase carbon credits from projects that protect, restore and sustainably manage natural ecosystems. We also invest directly in nature-based projects to help increase the supply of high-quality carbon credits and support growing customer demand for credible climate solutions.
When we invest directly in projects, we make long-term commitments and work closely with project developers, local communities, governments, NGOs and independent experts. By combining local knowledge with Shell's scale and expertise, we aim to support climate action, protect and restore nature, and create lasting benefits for communities.
What are nature-based solutions?
The International Union for Conservation of Nature (IUCN) defines nature-based solutions as “actions to protect, sustainably manage, and restore natural or modified ecosystems that address societal challenges effectively and adaptively, simultaneously providing human well-being and biodiversity benefits". They recognise nature-based solutions (NBS) as an important tool in addressing societal challenges, such as climate change, biodiversity loss, and food security, and organisations such as the Intergovernmental Panel on Climate Change have highlighted the role NBS can play in limiting global warming to 1.5°C.
At Shell, we’re investing in NBS through projects that work with ecosystems such as forests, grasslands, wetlands, and coastal zones, or projects that improve agricultural sustainability. These NBS projects aim to absorb more CO2 or prevent the release of greenhouse gases into the atmosphere, while also delivering benefits to local communities and biodiversity of the area.
Carbon credits are one of the mechanisms for investing in these NBS projects; each tonne of CO2 stored or avoided by a project generates one credit, which can be sold to help fund the project as it continues to protect, sustainably manage, or restore nature.
Benefits to climate, communities, and biodiversity
We believe that high-quality nature-based solutions are those that reduce or remove CO2 while also delivering benefits for communities and the natural environment. Explore some of the NBS projects that Shell is involved in.
Carbon farming in Australia
In 2020, Shell acquired Select Carbon, an environmental services company that specialises in developing and aggregating carbon farming projects.
Select Carbon work with landholders across Australia to develop projects that increase carbon sequestration in vegetation and soil to reduce net carbon emissions, while improving land management and helping landowners diversify their income streams to build a more resilient business. The projects cover over 9 million hectares.
The projects work with methodologies approved by the Clean Energy Regulator to help Australian farmers and landowners create Australian Carbon Credit Units (ACCUs) from land-based carbon projects.
Regenerating mangroves in Senegal
We have invested directly in the Sine-Saloum project in Senegal, where we are working with WeForest to regenerate about 3,800 hectares of mangroves as part of one of the world's largest mangrove restoration project. The mangroves will also provide a sustainable habitat for numerous bird and fish species and provide nesting places for sea turtles and other endangered species such as the Atlantic humpback dolphin and African manatee. In 2021, we undertook an environmental-DNA study of the ecosystem to help establish a biodiversity baseline. This will help us understand the current state of biodiversity and enable the monitoring if improvements in the future.
The project works with independent standards bodies to review and certify carbon credits generated from the project.
Ensuring projects make a difference
Shell often works through partners to design and implement NBS projects and we choose our partners carefully to ensure their ways of working with communities align with ours. We also provide support to partners if we identify gaps. The community aspects of NBS projects include stakeholder engagement, understanding potential community impacts and opportunities, and designing interventions such as benefit sharing programs.
We validate our partners’ approach to ensuring that free, prior and informed consent from property rights holders is properly carried out before project activities start. We also evaluate the project’s grievance mechanism to ensure that it is in line with the UN Guiding Principles on Business and Human Rights ‘access to remedy’ pillar, checking to see that issues that might come up can be resolved in a timely, fair, and transparent way. And we evaluate benefit sharing programs to make sure they respond to community needs in a fair, transparent and equitable way. We believe that each of these elements is critical to developing a sustainable and equitable NBS project.
To help deliver quality and integrity:
We select projects that are certified under credible and independent carbon credit standards.
We only use carbon credits in our offers to customers if they have been issued by projects that are certified under an approved standard. These include the Verified Carbon Standard, Gold Standard and the American Carbon Registry. We do this to ensure that the carbon credits are real and verifiable, and that issues such as permanence, additionality, and leakage have been adequately considered.
We aim to select projects that deliver wider benefits to the environment and local communities.
We aim for all our projects to meet or exceed the threshold established by the Climate, Community and Biodiversity Standards or equivalent where applicable.
We work with project developers that can maintain appropriate health, safety, security and social governance standards.
We expect the projects to have a net positive impact. Project developers we work with must ensure they employ the necessary standards and processes to mitigate against health, safety, security, and environment risks – including human rights violations – associated with their projects. We insist on this in our contracting, as well as through due diligence on project developers before we do business with them.
Our internal project screening review and management processes are audited by an independent third-party.
Each year, we engage a third-party auditor to verify the integrity of the processes we use for screening our nature-based projects. A copy of the latest assurance statement can be found here (PDF, 128 kB).
Ensuring high-quality nature-based carbon credits
This is a fast-growing sector and all participants must work to promote quality and build societal confidence in NBS as a viable, additional lever for helping reach net-zero emissions. Shell continues to work with others to do this, including NGOs, certification standards bodies, academics, and communities, and revise and update our approach to quality as we do so.
Read more about Shell's NBS policy positions
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How does a carbon credit work?
How does a carbon credit work?
Carbon credits are generated by projects that remove, reduce, or avoid greenhouse gases.
Each tonne of CO2e removed, reduced, or avoided by a project generates one carbon credit. To ensure that the projects we work with are making a real and verifiable impact, Shell only selects projects certified under independent carbon credit standards.
Why is Shell making investments in nature-based solutions or buying carbon credits?
Why is Shell making investments in nature-based solutions or buying carbon credits?
Carbon credits can be retired by Shell to compensate for our emissions and to allow our customers to compensate their emissions in line with the mitigation hierarchy of avoid, reduce and compensate.
Shell buys carbon credits generated by projects that protect nature and restore the environment. Our Nature-Based Solutions business also invests directly in natural ecosystems to increase the supply of carbon credits and help meet demand from customers.
When it comes to the carbon credits we buy, we only select credits from projects that are certified under credible and independent carbon credit standards. These include the Verified Carbon Standard, Gold Standard and the American Carbon Registry. We do this to ensure that the carbon credits are real and verifiable, and that issues such as permanence, additionality, and leakage have been adequately considered.
Why does Shell use carbon credits?
Why does Shell use carbon credits?
We believe carbon credits are an important complement to emissions reductions. Not all technologies and energy services can be swapped out for non-emitting alternatives at the necessary pace. In some difficult to decarbonise sectors such as heavy industry, practical alternatives have yet to be developed.
For some businesses, avoiding and reducing emissions will not be enough to reach zero, or an emissions trajectory consistent with the Paris Agreement. Carbon credits can help close the gap and enable them to reach net-zero emissions.
How many carbon credits does Shell use?
How many carbon credits does Shell use?
Shell is one of the largest retirees of carbon credits globally, having retired over 57 million carbon credits between 2021 and 2025, of which around 89% were related to Shell’s net carbon intensity (NCI).
Each carbon credit reflects one tonne of CO₂ stored or avoided by the project.
Instead of carbon credits, why does Shell not invest more in renewables?
Instead of carbon credits, why does Shell not invest more in renewables?
We are absolutely clear that decarbonisation must start with avoiding and reducing emissions. Carbon credits are not a replacement for emissions reductions within Shell’s supply chains.
However, not all technologies and energy services can currently be swapped out for non-emitting alternatives at the necessary pace. In some sectors, practical alternatives have yet to be developed. Carbon credits can help compensate for emissions from those sectors right now.
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