(Bloomberg) -- Emboldened by new industry guidelines, natural gas companies are renewing their efforts to sell “carbon neutral” fossil fuels, a controversial practice of offsetting a shipment’s emissions to shrink its environmental impact.

Shell Plc delivered roughly 70,000 tons of liquefied natural gas to Taiwan in a deal announced last week, the first shipment certified as “greenhouse gas neutral” under a new standard developed by the International Group of Liquefied Natural Gas Importers. 

In practice, that means Shell and the purchaser, CPC Corp., bought carbon credits to offset the 190,000 tons of CO2 emissions generated by the LNG from production to combustion — similar to what the company did when it first marketed “carbon neutral” LNG in 2019.  

Putting a “carbon neutral” label on fossil fuels is appealing for obvious reasons: It allows both buyers and sellers to assert that the transaction has no negative environmental impact, contributing to net-zero goals and reassuring ecologically minded investors.

But after a flurry of enthusiasm, those shipments all but disappeared when gas prices spiked last year, and when it became clear there was no standard way for fuel companies to measure emissions or purchase credits. The industry also came under fire for using cheap, low-quality credits, that represent little if any environmental benefit. 

The GIIGNL framework, which was released in 2021, now adds standards for documentation and transparency. To comply, companies must calculate and report greenhouse gas and methane emissions, the name and type of offsets they use and plans to reduce emissions from drilling to consumption.

To call a shipment “GHG neutral,” the buyer and seller must also have a stated commitment to decarbonization and a verified plan to reduce emissions in the short- and medium-term, said Vincent Demoury, general delegate for GIIGNL.

GIIGNL declined to set standards for acceptable offsets in order to reflect “the diverse needs of members” and evolving carbon market rules, according to the framework.

Shell’s latest shipment used credits primarily from a project which prevents deforestation. Climate scientists at the United Nations-backed Science Based Targets initiative and elsewhere say these kinds of offsets do little to extract additional carbon from the air, and shouldn’t contribute to net-zero claims.

Shell declined to comment. CPC declined to comment on the specifics of the deal, and referred Bloomberg to its 2022 ESG report, which sets a net-zero target for 2050.

The deal followed GIIGNL’s standards, the industry group said, and was verified by the British Standards Institution. Ben Cahill, an energy analyst at the Center for Strategic and International Studies in Washington DC called it “a good step forward,” adding that “there was essentially zero transparency about the early carbon-neutral LNG trades.”

Despite the new standards designed to boost transparency, the companies revealed few details about the shipment, such as price and the exact breakdown of how many credits were purchased from each project, making it challenging to verify the authenticity of the statements. 

“We still don’t really have any information about the cargoes and emissions at each stage,” said Jonathan Stern, distinguished research fellow at the Oxford Institute for Energy Studies. “We need a lot more granularity, else the industry runs the risk of being accused of greenwashing.”

--With assistance from Betty Hou and Akshat Rathi.

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