Carbon-Offsets Create World’s First Carbon-Neutral Oil Shipment
The use of carbon offsets has been attracting increasing levels of interest in the maritime and other sectors as an early technique to improve the environmental impact of businesses that among the largest contributors of greenhouse gas emissions. Using this method, a shipment of oil recently offloaded in India is clamming the title of the world’s first carbon-neutral oil shipment. This follows the recent reports of the first carbon-neutral container shipment.
The two million barrels of oil were produced in the U.S. Permian Basin by Occidental and delivered by its Oxy Low Carbon Ventures division to Reliance Industries in India aboard the VLCC Sea Pearl operated by Pantheon Tankers. This transaction, which was arranged in conjunction with Macquarie Group’s Commodities and Global Markets group, is reported to be the energy industry’s first major petroleum shipment for which greenhouse gas emissions associated with the entire crude lifecycle, wellhead through the combustion of the end products, have been offset.
Macquarie arranged and structured the bundled offset supply and retirement. The offsets were sourced from a variety of projects verified under the Verra Verified Carbon Standard meeting eligibility criteria for the UN’s International Civil Aviation Organization’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). The volume of offsets applied against the cargo is sufficient to cover the expected GHG emissions from the entire crude lifecycle including oil extraction, transport, storage, shipping, refining, subsequent use, and combustion.
According to the companies that worked together to complete this shipment, this type of transaction, which involves the bundling of carbon offsets with crude oil, is an immediate executable solution that helps promote investments in longer-term, industrial-scale decarbonization strategies. They believe that this transaction will be a first step in the creation of a new market for climate-differentiated crude oil.
This ship is also seen as a bridge to the development of a further differentiated petroleum product, net-zero oil, which Occidental intends to eventually produce through the capture and sequestration of atmospheric CO2 via industrial-scale direct air capture (DAC) facilities and geological sequestration.