Shell Plc is reportedly planning to sell a portion of its nature-based carbon projects as the emissions offset market contracts. The move aligns with Chief Executive Officer Wael Sawan’s strategic shift to prioritise high-return ventures, as the company gradually scales back in areas lacking strategic advantage, including offshore wind.
Initiated in 2018, Shell’s offset portfolio spans dozens of projects, with an ambitious target set in 2021 to generate 120 million carbon credits annually. The company has since become the largest publicly disclosed buyer of carbon credits, according to BloombergNEF. Now, Shell is considering divesting a majority stake in this portfolio while retaining a minority interest, a company spokesperson confirmed.
Shell is reportedly in discussions with potential investors, including private equity groups. Most projects for sale generate REDD+ credits, representing emissions reductions through anti-deforestation measures. However, the REDD+ sector has faced scrutiny over inflated impact claims, with market prices for these credits plunging from $12.50 in 2022 to an average of $3.60 this year, according to MSCI Carbon Markets.
This divestment plan is part of a larger strategic shift under Sawan, who took over in January 2023 and scaled back Shell’s upstream carbon market commitments. In recent months, Shell shelved a previous commitment to invest up to $100 million annually in carbon credits, pivoting focus back toward fossil fuels.
Potential deal structures under consideration include selling Shell’s stake in the projects while continuing to purchase credits, or fully divesting without an offtake contract—though the latter may prove less appealing to buyers.
This sale comes amid broader sector consolidation and evolving regulatory frameworks, particularly in Asia-Pacific. New quality standards from the Integrity Council for the Voluntary Carbon Market are also influencing buyer choices. Experts suggest Shell and other oil majors may pivot toward engineered carbon removal solutions, such as direct air capture, as cost and scalability improve.
