Nature-based solutions
Shell invests in nature-based projects involving the protection, restoration or sustainable management of natural ecosystems. Some of these projects generate carbon credits that Shell may purchase, use, or offer to customers for the purpose of compensating for emissions that cannot be avoided or reduced.
Shell working to reduce emissions from our operations, and offers customers a range of energy products and services, including biofuels, hydrogen and carbon capture and storage (CCS). Where appropriate, Shell also uses and offers carbon credits issued by projects that avoid, reduce or remove greenhouse gas emissions.
Nature-based projects form part of this activity. Shell purchases carbon credits from projects involving the protection, restoration or sustainable management of natural ecosystems. Shell also invests directly in selected nature-based projects that may generate carbon credits.
When Shell invests directly in projects, we aim to make long-term commitments and work with project developers, local communities, governments, NGOs and independent experts.
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". Nature-based solutions may also be used to address challenges including climate change, biodiversity loss and food security.
Shell invests in NBS through projects involving ecosystems such as forests, grasslands, wetlands and coastal zones, as well as projects focused on agricultural practices. Depending on the project, activities may be designed to remove greenhouse gases from the atmosphere or avoid or reduce their release. Projects may also include activities intended to benefit local communities and biodiversity.
Carbon credits are one mechanism for financing NBS projects. Under the applicable carbon standard and methodology, one issued credit represents one tonne of CO₂e reduced, avoided or removed. Revenue from credit sales may help fund project activities.
Benefits to climate, communities, and biodiversity
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.
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 against 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 are important components of responsible project development.
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. These standards assess projects against defined requirements, including considerations such as permanence, additionality and leakage.
We consider environmental and community-related characteristics when assessing projects.
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).
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Learn more about NBS
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. Shell only selects projects certified under independent carbon credit standards. These standards assess projects against defined methodologies and requirements, including factors such as permanence, additionality and leakage.
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 may be used by our customers to compensate emissions in line with the mitigation hierarchy of avoid, reduce and compensate.
Shell buys carbon credits generated by projects involving the protection, restoration or sustainable management of natural ecosystems. 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. These standards assess projects against defined methodologies and requirements, including considerations such as permanence, additionality and leakage.
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 eliminate all emissions. Carbon credits can be used to compensate for emissions that remain after efforts to avoid and reduce emissions have been made.
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.
