ZeroSix and the Voluntary Carbon Market
What makes ZeroSix carbon credits—including those based on leave-it-in-the-ground fossil reserves—different from other carbon credits available on the voluntary carbon market (VCM)?
More than 70% of the world’s anthropogenic GHG emissions come from fossil fuel combustion and the hydrocarbon supply chain. Yet, most carbon offsets that companies buy to reach net zero targets have little to do with reducing fossil fuel consumption.
For example, nature-based carbon credits for avoided nature loss (e.g., protecting a forest from deforestation) and nature-based sequestration (e.g., carbon sequestered in biomass) “compensate” for GHG emissions that have already happened elsewhere in a company’s climate footprint.
By contrast, ZeroSix carbon credits from accelerated retirement of oil & gas wells are positioned upstream, directly within the fossil fuel supply chain, to prevent emissions from happening in the first place. By permanently protecting in-the-ground reserves from being extracted and burned we can address one of the core drivers of climate change.
Carbon credits and carbon offsets have come under a lot of scrutiny recently—aren’t carbon offsets a cheap way for companies to claim carbon neutrality or net zero emissions, without actually cleaning up their emissions footprint? Isn’t this just a greenwashing scam? Or can ZeroSix claim real positive climate impact?
Carbon credits, in their proper use, are part of a wider effort from an entity (e.g. country, state, company or individual) to achieve net zero emissions. This effort includes avoidance, reduction and offsetting. First and foremost companies should aim to avoid emissions. Second, companies should aim to reduce the GHG emissions where they can not be avoided. Third, and lastly, for the remaining emissions that can not be avoided or reduced in the short term high-quality carbon credits should be used to offset the remainder.
Carbon credits have come under scrutiny recently because, upon further investigations, many projects would have happened anyway or even worse did not happen at all.
ZeroSix aims to contribute to the solution by setting a new standard for high-quality carbon credits rooted in accuracy, additionality, permanency, and transparency. We believe that ZeroSix offers solutions to challenges in the VCM and challenges in the energy transition in general. For details on this we refer to answers in this FAQ.
What is the role of the VCM en route to Paris targets and a net-zero world?
For a shot at reaching net-zero emissions by 2050 and a 1.5ºC Paris Agreement-aligned trajectory, the Intergovernmental Panel on Climate Change’s (IPCC’s) most recent AR6 report made clear that the world needs both rapid decarbonization (i.e., emissions reductions) and carbon dioxide removal (e.g., carbon capture, utilization, and storage).
Yet, despite the scaling of solutions—including renewable energy generation and electric vehicle adoption—there remains a massive 23 gigatonne (Gt) gap between what’s needed for a Paris-target-aligned 2030 trajectory and the world’s current greenhouse gas (GHG) emissions.
The World Economic Forum (WEF) and others have emphasized that carbon markets—both compliance and voluntary—will have a significant role to play, by tapping into the global need for both avoidance- and reduction-based carbon credits.
How much GHG emissions can be avoided through the ZeroSix solution?
Scientists estimate that 60% of the world’s oil & gas reserves and 90% of coal reserves must be left in the ground—unextracted and unburned—through 2050 to stay within Earth’s carbon budget. Yet Carbon Tracker’s global registry of fossil fuel reserves finds that the U.S. alone has enough fossil fuel reserves to blow the Earth’s entire carbon budget, even if all other countries ceased production immediately*.
For 150 years, the modern oil & gas industry’s focus has been on surfacing, refining, and burning fossil fuels. As the climate crisis grows, in a net-zero world, the most valuable barrels of oil and cubic feet of natural gas will be those that remain in the ground—never extracted and never burned. The next era of fossil fuel ‘prospecting’ is focused on the dual economic and climate opportunity of ‘harvesting’ unburned oil and natural gas as permanently protected carbon credits.
According to ZeroSix analysis, our solution could unlock 1 Gt CO2e per year of avoided emissions, more than the annual GHG emissions of Germany, the world’s fourth-largest economy. And that massive opportunity is only counting oil & gas combustion. It is a conservative number that does not count other supply chain emissions which is a huge additional climate benefit.
For example, the U.S. is home to more than 850,000 low-rate wells producing less than 100 barrels of oil per day. This includes hundreds of thousands of ‘stripper wells’ that produce less than 15 barrels per day. Stripper wells account for less than 1% of U.S. oil & gas production, yet they are disproportionately responsible for a staggering 11% of sector methane emissions.
By targeting low-rate wells first, we’re also targeting the most-polluting wells that offer the best “bang for the buck” in terms of avoided emissions.
*https://carbontracker.org/finally-we-have-a-global-registry-of-fossil-fuels/
Why should fossil fuel companies earn carbon credit revenue for their oil & gas wells? Shouldn’t they plug and abandon them per government regulations anyway? The fossil fuel industry—not climate-focused and sustainability-minded companies and society—should pay the costs to abandon their reserves.
With the urgency of the climate crisis, all parties have a vested interest in investing in solutions that accelerate the energy transition off fossil fuels and onto modern, clean energy sources.
The reality is that today, many oil & gas producers continue operating low-rate wells to avoid plugging & abandonment costs, ultimately declaring bankruptcy for those wells. This leaves the mitigation responsibility in the hands of state and local governments, all at the expense of taxpayers. Meanwhile, those low-rate wells do continue producing fossil fuels that are ultimately burned, typically leaking fugitive methane, a potent GHG, in the process.
This is a losing scenario for almost everyone involved, especially the climate.
We are harnessing the power of the voluntary carbon market to create a financial incentive for oil & gas producers to permanently retire candidate wells early. This keeps plugging & abandonment costs in the hands of the producers, while accelerating the closure of wells, thus avoiding the emissions from both the combustion of those fuels and the fugitive methane that would have leaked during the wells’ remaining lifetime.
That’s a winning formula for everyone involved, most of all for the climate. We’re providing a meaningful pathway for oil & gas producers to become part of the climate action solution.