How to burn the planet. Shell invests US$38 million in Carbonext, Brazil’s biggest REDD offset firm

By Chris Lang

Shell is one of the world’s most polluting corporations. For several decades Shell has been interested in carbon offsetting, to greenwash its continued pollution.

This week, Shell announced that it has invested US$38 million in a Brazilian company called Carbonext that runs REDD projects in Brazil’s Amazon rainforest. Under the deal, Shell will receive preferential access to Carbonext’s offsets. But Carbonext will not be reducing the price of its offsets for Shell.

Shell: Business as usual

In 2021, Shell put out a report titled, “Powering Progress”, in which it explains how it will become “net-zero emissions energy business by 2050”. It is greenwash, of course.

ESG Telegraph reports that commenting on the investment in Carbonext, Shell Brazil’s president Andre Araujo said that,

“Brazil, due to its location and biodiversity, is fundamental to our Powering Progress strategy, especially when we talk about respecting nature and boosting lives, in addition to achieving net zero emissions and generating value for shareholders. It is not today that Shell defends the creation and regulation of the carbon market. Associating our company with Carbonext is an important step towards our goal of offsetting 120 million tonnes of CO₂ per year by 2030 with nature-based solutions for Scope 3, which are emissions that are difficult to abate, in line with the mitigation hierarchy.”

Scope 3 emissions take place when Shell’s fossil fuels are burned and enter the atmosphere. And burning fossil fuels is what’s driving the climate crisis. Shell’s US$38 million investment exposes the carbon offset scam for what it is: A way for Shell – and the rest of the fossil fuel industry – to continue profiting from business as usual for as long as possible.

Carbonext and REDD

Carbonext is largest generator of carbon offsets in Brazil, generating 2.5 million credits between January and May 2022, worth a total of US$30 million. That’s more than double the second largest company, Biofílica. Carbonext hopes to sell 10 million offsets this year.

Brazilian newspaper Valor Econômico writes that 50% of the money from sales of offsets goes to landowners and 20% is spent on the maintenance and preservation of the area. The remaining 30% goes to Carbonext.

But Carbonext is less than transparent about where exactly its REDD projects are.

Carbonext claims on its website that, “Our projects protect around 2 million hectares of the Amazon rainforest.” Elsewhere on the website the company describes its impact as “+1.800.000 of protected hectares”, and on its app selling carbon offsets, it states that, “Our projects preserve more than 500 thousand hectares of Amazon rainforest” and claims “2.8 billion m² of preserved area” (which amounts to 280,000 hectares).

Carbonext’s website lists only four projects:

• The Evergreen REDD+ project in the municipality of Apuí, Amazonas: 130,555 hectares.
• The Fortaleza Ituxi REDD+ project in the municipality of Lábrea, Amazonas: 46,592 hectares.
• The Hiwi REDD+ project, in the state of Acre: 20,505 hectares (project not yet validated by Verra).
• The Unitor REDD+ project in the municipality of Lábrea, Amazonas: 99,035 hectares.

That gives a total of 276,182 hectares of project validated by Verra. Four more projects are listed on the company’s website under the headline “Soon”. None of these projects have so far been listed on Verra’s VCS Project Database.

Carbonext has also traded carbon offsets from the Envira Amazônia Project in the state of Acre. The project covers an area of 39,301 hectares, but Carbonext was not involved in developing or running the project. The project is listed on Carbonext’s app, but clicking on “Learn more about Envira” takes us to Carbonext’s webpage about the Evergreen REDD+ project.

Carbonext

Carbonext was registered as a company in 2010, by forest engineer Janaína Dallan.

Dallan is on the “expert panel” for the Integrity Council for Voluntary Carbon Markets – the carbon trading industry’s fox-guarding-the-hen-house self-regulatory body. She’s president of the Brazil Alliance for Nature-Based Solutions. And she’s on the UN Clean Development Mechanism Registration and Issuance Team.

Dallan’s brother, economist Luciano Corrêa da Fonseca, joined her two years ago as a partner in the company. He was previously a director at the investment firm Pátria Investimentos. Since joining Carbonext, Fonseca has brought in Maurício Simões, from pulp and paper giant Suzano and Felipe Viana, from investment company XP.

He has also brought in money. Last year Carbonext raised about US$5.3 million from about 20 investors. In an interview with S&P Global Fonseca said that,

“We have big traders, oil companies, mining companies – they’re all looking for long-term carbon credit supply contracts where you have prices locked in.”

Following the deal with Shell, Fonseca commented on LinkedIn,

Today was an especially happy day, we sealed a partnership with a company that we learned to admire. With serious people, fine people and very committed to providing energy to the world in a way that is appropriate to our technological possibilities and our environmental context.

That is a ridiculous comment. Shell is not in any way committed to providing energy in a way that is appropriate to our environmental context. If anything the exact opposite is true.

Shell

On 26 May 2021, the District court of the Hague held Shell liable for causing dangerous climate change. The decision followed legal action brought by Friends of the Earth Netherlands. The judge ordered Shell to reduce its greenhouse gas emissions to 45% below 2019 levels by 2030.

But, instead of immediately starting to reduce its emissions, Shell appealed the decision.

If you’ve not seen climate justice activist Lauren MacDonald confronting Shell’s CEO, Ben van Beurden, about this at a TED conference in October 2021, it’s well worth watching:

MacDonald starts her short speech by pointing out that,

“Shell has spent millions covering up the warnings from climate scientists, bribing politicians and even paying soldiers to kill Nigerian activists fighting against them, all whilst rebranding to make it look as though they care, and that they have the intention of changing.”

This, then, is Shell, the climate destroying corporation that Carbonext “has learned to admire” so that it can profit from greenwashing Shell’s pollution.