With the right attitude, opportunity is everywhere.
From Bloomberg, July 11:
The junior traders at TotalEnergies SE were essentially winging it last September by orchestrating the French energy giant’s first shipment of “carbon neutral” natural gas. It’s the greenest-possible designation for fossil fuel and an important step in making the company’s core product more palatable in a warming world. Nailing down the deal involved Googling and guesswork.
Total had proposed the trade after learning a client had already purchased two carbon neutral cargos from rivals at Royal Dutch Shell PLC, according to people with knowledge of the deal who asked not to be named discussing a private transaction. One of these insiders said that only after getting the go-ahead did the inexperienced team attempt to figure out how to neutralize the emissions contained in a hulking tanker full of liquified natural gas. Their first step was to search the internet for worthy environmental projects that might offset the pollution.
Thousands of miles away, a Zimbabwean volunteer named Kembo Magonyo would spend the spring months clearing stubborn jumbles of branches near the thickly forested border with Mozambique. Wildfires tend to leap between the two countries, laying waste to trees before anyone can respond. “This whole bush can be razed to the ground if we don’t do what we’re doing,” Magonyo says, hacking away with his machete. His work is organized by a group partly funded by Total’s carbon-neutral deal.
In the complicated new math of climate solutions, villagers clearing brush in southern Africa can end up redefining networks of global commerce worth billions of dollars. Environmental projects stand as shadow partners to emission-heavy energy trades happening far away.
What Total’s gas cargo puts into the atmosphere, the machete-wielding villagers will remove. That’s the theory.
But to make it work, Total’s pioneers of carbon neutrality first needed to find green projects capable of meeting two requirements: being able to generate carbon credits backed by an international organization without costing too much. After struggling to come up with an answer, the team set up a meeting with South Pole, a project developer based in Zurich that came recommended by rival traders. That’s how $600,000 from a $17 million LNG transaction ended up, in part, paying for forest protection in Zimbabwe.
The resulting trade looks like a win for everyone. Total kept its promise to investors to shrink its carbon footprint. Impoverished communities received financial support. And the buyer, China National Offshore Oil Corp., cited the shipment as one of the steps it’s taking to “provide green, clean energy to the nation.” But climate experts and even a crucial organizer behind the deal say it will do virtually nothing to decrease carbon dioxide in the atmosphere, falling far short of neutral.
“The claim that you can market the sale of fossil fuels as carbon neutral because of a meager few dollars you put into tropical conservation is not a defensible claim,” says Danny Cullenward, a Stanford University lecturer and policy director at CarbonPlan, a nonprofit group that analyzes climate solutions for impact.
At best, Cullenward says, efforts to prevent deforestation by stopping wildfires can only avoid additional heat-trapping gas released when trees burn. Rural villagers can’t do anything to counteract the large-scale pollution from natural gas, other than making energy traders and consumers feel good for supporting green causes in regions where money is scarce.
Total said in a statement that it conducts due diligence on offset projects and confirmed that it split the cost of offsets in the LNG transaction with Cnooc. The French company declined to discuss details, including prices paid for carbon credits, citing a nondisclosure agreement. Cnooc didn’t respond to requests seeking comment. Total also said it doesn’t count carbon credits in its companywide emissions reports or as part of its plan to reach net zero by 2050. “While an important tool,” the company said, “offsetting cannot be considered as a substitute for direct emissions reductions by corporates, but as a complement.”
The use of scientifically defined terms like “carbon neutral” and “net zero” in marketing language introduces additional confusion. Both terms mean balancing any emissions added to the atmosphere with an equivalent amount of removal. Most experts agree that avoiding deforestation isn’t the same as removing greenhouse gases. “This paradigm,” warns Cullenward, “is encouraging a fictitious engine that doesn’t help advance our net-zero goals.”
That view isn’t reserved for outside critics. The leader of South Pole, which helped develop the Zimbabwe project and sold its carbon credits to Total, doesn’t believe forest protection can rectify pollution from natural gas. “It’s such obvious nonsense,” says Renat Heuberger, co-founder of South Pole. “Even my 9-year-old daughter will understand that’s not the case. You’re burning fossil fuels and creating CO2 emissions.”
Total’s product started warming the planet at the moment of extraction from the deep-sea Ichthys field off the Australian coast. Every part of its life-cycle generated greenhouse gas. Sending the gas to an export facility through an 890-kilometer pipeline risked leakage of methane, a powerful pollutant that traps 80 times more heat than carbon dioxide in its first two decades. Chilling the gas into a liquid for shipping wrought additional emissions. Even the tanker that brought the LNG to Shenzhen in southern China burned some of the fuel while sailing.
At the final destination, after Cnooc claimed the cargo last September, the LNG was likely burned to power the city’s countless factories or an electricity grid serving more than 12 million people. This would leave a centuries-long residue of atmospheric carbon dioxide that Total’s traders had to neutralize. But how much? Total and Cnooc agreed to set the shipment’s emissions at 240,000 metric tons of carbon dioxide, the same amount of pollution generated by 30,000 U.S. households in a year....
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