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.
Working with nature to remove and reduce CO₂ emissions
Shell has set a target to become a net-zero emissions energy business by 2050. This supports the more ambitious goal to tackle climate change laid out in the UN Paris Agreement: to limit the rise in average global temperature to 1.5° Celsius.
We are transforming our business to meet our target: reducing emissions from our operations and providing more low-carbon energy, such as charging for electric vehicles, hydrogen and electricity generated by solar and wind power. We will also capture and store any remaining emissions using technology or balance them through nature-based projects.
To help us do that, we buy carbon credits generated by projects that protect nature and restore the environment. We also invest directly in natural ecosystems to increase the supply of carbon credits and help meet growing demand from customers.
When directly investing in projects we make long-term commitments, leveraging Shell’s scale to help realise nature’s potential in tackling climate change. We work closely with project developers, local communities, governments, NGOs, and other experts to ensure that we can make a difference.
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"1.
The IUCN has recognised 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 absorb more CO2 or prevent the release of greenhouse gases, 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.
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.
Restoring degraded land in the Philippines
In the Philippines we are working with University of Sunshine Coast and Visayas State University to restore over 10,000 hectares of deforested land on the Islands of Leyte and Biliran. These islands have experienced significant forest loss since the 1960’s attributed to both legal and illegal logging, agricultural conversion, and wildlife and timber poaching.
The developing parties are working closely with the Department of Environment and Natural Resources, Local Government Units, and People’s Organizations (POs) who hold Community-based Forest Management (CBFM) land tenure to restore and maintain the forests.
Ensuring projects make a difference
Respecting Nature is one of the pillars of Shell’s Powering Progress strategy. We made a commitment that the nature-based projects which protect, transform or restore land will be net positive for biodiversity from 2021.
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 select projects that deliver wider benefits to the environment and local communities.
We insist all our projects 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, 74 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.
In 2021 we set out what we have learnt over the past years and the steps we take to pursue quality credits in our report, ‘Ensuring high-quality nature-based carbon credits.’
Frequently Asked Questions about nature-based solutions
Why is Shell making investments in nature-based solutions or carbon credits projects?
Why is Shell making investments in nature-based solutions or carbon credits projects?
Carbon credits are an important part of our target of becoming a net-zero emissions energy business by 2050 and they are a valuable additional lever society can use to support decarbonisation today.
Through our Nature Based Solutions business we continue to invest directly in nature-based carbon projects that generate carbon credits. This includes implementation of our existing investments as well as developing a future portfolio of high-quality carbon projects.
We also buy carbon credits from the market. We carefully screen all the carbon credits before adding them to our portfolio and work with certification standards and rating agencies to check that our requirements are met. In doing so we continue to build a strong portfolio of carbon credits that can be used by Shell and our customers.
How are carbon credits used by Shell?
How are carbon credits used by Shell?
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. As part of our selection criteria for NBS, we look for projects that will have a net positive impact for biodiversity and communities.
We offer customers the opportunity to purchase high-quality carbon credits with the Shell fuel they buy to help compensate for the CO₂ emissions generated by the extraction, refining, distribution and use of the product. For example, this offer is available to our fleet customers in 21 countries and to retail customers at more than 4,000 service stations in nine countries. We also deliver liquefied natural gas (LNG) cargoes with carbon credits to customers across the globe in line with the framework of the International Group of Liquefied Natural Gas Importers (GIIGNL).
How many carbon credits does Shell use?
How many carbon credits does Shell use?
For 2022, we retired around 5.8 million carbon credits on behalf of our customers, of which 4.1 million credits are included in our net carbon intensity and 1.7 million credits are associated mainly with the sale of non-energy products and Shell’s business travel. These numbers exclude direct carbon trading activities. Each carbon credit reflects one tonne of CO₂ stored or avoided by the project.
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