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.