Companies used carbon credits created in oil extraction projects

Daimler Trucks, eBay and a US energy company were among the recent buyers of carbon offsets created by projects that involved injecting carbon dioxide underground in order to extract more oil.

Three US-based projects were able to generate credits because of their capture of CO2. Enhanced oil recovery is a procedure used to extract fresh oil that would otherwise be impossible.

The emissions associated with the oil were ignored by the offsetting rules.

Buyers have used nearly 3 million credits from the three projects that can't generate new offsets because of a rule change. The carbon that has been permanently avoided or removed from the atmosphere is called an offset.

The policy officer at Carbon Market Watch said that offsetting emissions with these credits is nonsense.

Stuart Haszeldine, professor of carbon capture and storage at Edinburgh university, said that in the US it had never been accepted that the extra oil produced by the EOR process has a carbon footprint.

Companies use offsets to reduce their carbon emissions. The money from the sale of credits is used to fund environmental projects.

The three US EOR projects generated over 12 million offsets. Companies can still buy credits that were created before the change.

Merit Energy and Blue Source developed one of the schemes. The project used carbon from an ExxonMobil facility.

DJR Operating used 150,000 offsets from the Merit project. Canadian power generator TransAlta used 376,000 of these credits in 2015, while eBay bought 1,700 credits between 2020 and 2021, according to data from the American Carbon Registry.

DJR did not respond, and TransAlta declined to comment.

Since 2020, Terrapass customers have used 73,000 credits from the three legacy schemes.

Terrapass said its customers supported dozens of renewable energy and greenhouse gas destruction projects.

In April, a landmark UN report on climate change said it would be essential to remove carbon from the atmosphere to limit warming to 1.5C above pre-industrial levels. The cement and steelmaking sectors are unlikely to ever reach zero emissions and should use CCS.

Proponents of EOR say the process provides a market for captured carbon emissions and will help accelerate the development of carbon capture technology.

Blue Source and Merit Energy did not respond to questions.

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