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Isn’t one of Shell’s carbon offsets projects fundamentally flawed?

Isn’t one of Shell’s carbon offsets projects fundamentally flawed?

Peru’s Cordillera Azul National Park was established years before the project started, raising doubts how CO2 sequestered there is “additional”

Oil and gas company Shell, holding its AGM tomorrow, claims that customers can drive “carbon neutral” or buy “carbon neutral” liquified natural gas because it purchases carbon credits from various offsetting projects around the world, one of them dubbed “Cordillera Azul, Peru” in the remote Amazon. The project, from which numerous other companies buy credits too, supports “a rich ecosystem of indigenous biodiversity, high carbon stock forests,” states. “A multicultural population of more than 250,000 people organised in 400 communities live in the buffer zone around the Park boundaries. By 2021, [the project] aims to have protected 1.6 million hectares of threatened forest and 28 high conservation value species, supported 716 jobs and created or supported 24 sustainable enterprises.”

Over on the wording is slightly different: the “Cordillera Azul, Peru” project “strives to transform local communities and ecosystems by driving” – no pun intended, presumably – “the development of alternative livelihoods for local people through climate-friendly activities such as agriculture, textiles and crafts.” The figures differ as well: the project protects 1.3 million hectares, the website states, and supports 440 communities, 730 jobs and 27 sustainable enterprises.

Encouraging as all this may sound, Shell fails to make explicit the fact that, as journalists from SourceMaterial and I have acknowledged previously, the “Cordillera Azul, Peru” project area corresponds to the Cordillera Azul National Park, established by Peru’s government in 2001. In other words, it is a region that Peru was already legally obliged to protect long before the carbon project began in 2008, and it remains legally obliged to continue doing that now and “in perpetuity”, as the Supreme Decree law establishing the park puts it, irrespective of any offsetting initiative.

Doesn’t this render claims that the project is somehow sequestering “additional” carbon – i.e. CO2 that would be released if the project didn’t exist – somewhat contentious, to say the least? Being able to demonstrate such “additionality” is supposedly fundamental to carbon offsetting.

Shell isn’t open about this obviously crucial detail on its websites, with merely making that vague reference to “Park boundaries” and mentioning no park at all. The former’s claim that “by 2021 [the project] aims to have protected 1.6 million hectares of threatened forest” is not only out-of-date and factually incorrect – it should be 1.3 million, not 1.6, as I told Shell six months ago – but arguably gives the impression that much, most or even all of that forest would have been razed if the project didn’t exist, when actually the area corresponds to what is now Peru’s 3rd biggest park created more than two decades ago.

When I raised this with Shell, a spokesperson wouldn’t supply an on-the-record quote but said that protecting the area in practice, i.e. not just by law or on paper, requires management and funding. Well, obviously. I doubt anyone disputes that. Peru’s parks and other kinds of “protected natural areas” (PNAs), particularly in the Amazon, are persistently under pressure from oil and gas companies, loggers, gold-miners, coca growers and narco-traffickers, as has been documented regularly in recent years.

In addition, the Shell spokesperson told me that the NGO contracted by the Peruvian state to run the park, the Centro de Conservación, Investigación y Manejo de Áreas Naturales – Cordillera Azul (CIMA), wouldn’t be able to continue doing so if it wasn’t for the carbon project and the revenues generated by it. That spokesperson didn’t provide details, but according to the official 2012-dated “project description”, co-written by CIMA, in 2002 the state signed the first of several short-term contracts with the NGO to support managing the park, and then when in 2007 CIMA had some kind of a funding crisis the decision was taken to start a carbon project in order to ensure long-term financial security. The following year, CIMA signed another contract, this time for 20 years, for full management which included permitting it to use revenues from the sale of carbon credits to manage both the park and buffer zone.

But even if this was all true and there really was no other way for CIMA to obtain funds, so what? Suddenly changing how you do something that you’ve already committed or are obliged to do – in this case, running a park – doesn’t make doing it “additional.” All that you’ve done is found a different way to do it.

Not only that, but this line of argument about CIMA needing the carbon project in order to continue managing the park fails to acknowledge the obvious possibility that the Peruvian state could manage it instead, as is the case with almost every other of the country’s 15 parks. The “project description” unconvincingly tries to dismiss this as “not a plausible alternative” on the grounds that the state “does not have adequate funds”, and “there is no established government funding for management” because of the “specific conditions” under which the park was established. What, no funds. . . ever? Indeed, that document was so determined to eliminate the possibility of the state managing the park that it even claimed that it was less credible an alternative than “large agricultural (biofuel) projects” and “logging, mining or oil concessions” being slapped over “part or all of the project area”, which is patently absurd.

In fact, the “project description” even went as far as asserting “it is not likely that the government would have created the national park if it were not for the agreement for management by the non-profit organisation.” That might make the “additionality” claims slightly less contentious, but is there any truth to it? CIMA didn’t even exist when the park was established, it is worth noting, while interest in protecting the Cordillera Azul region dates back to at least the mid-1990s when some of it was officially declared a “biodiversity conservation priority.” Revealingly, when I asked for evidence, CIMA back-tracked.

“CIMA never made or would never make a statement like that,” executive director Gonzalo Varillas Cueto told me via email.

Again, though, even if some or all of this was true, and the park really wouldn’t have been established without some civil society organisation agreeing to manage it with its own funds, so what? That still wouldn’t make the CO2 sequestered there “additional.” For it to be truly “additional”, the park would have had to be established on the explicit condition that a carbon project would be hosted there, irrespective of who was managing it and how it was funded.

These claims of “additionality” might also seem less contentious if CIMA, after taking over management, had been struggling to protect the park. But that doesn’t appear to have been the case at all. According to the 2012 “project description”, two of the most obvious threats had already been contained before the decision to start a carbon project was taken.

“No illegal logging activities have been observed by park guards in or immediately around the project area since 2006,” that document stated, and “no evidence of significant slash and burn agriculture, motorized boat or vehicle fossil fuel use, or other sources of non-CO2 emissions have been observed within the park boundaries by CIMA technicians or park guards or in imagery analysis since the park was formed in 2001.” No doubt this goes some way to explaining why the project’s historical reference period used to estimate the future risk of deforestation was chosen to run from 1989 to 2003, rather than 2006 or 2008. If either of the latter had been chosen, it wouldn’t have appeared so comparatively successful.

Other documents echo the “project description” about the most serious threats to the park having been contained before the carbon project started. For example, the park’s Management Plan for 2011-2016 reported that the logging had been dealt with in the early years: “since the park’s establishment in 2001 the valleys [in the far west of the area] were the principle focuses of the illegal extraction of timber. The logging camps there were gradually and peacefully deactivated in the first few years.”

Similarly, the US’s Agency for International Development (USAID), which has given roughly US$10 million to CIMA over the years to manage the park, stated in a 2013 report that the NGO, together with The Field Museum in the US, had addressed the most “immediate threats” years before. “By 2006, illegal logging was completely eradicated from five basins where it was previously established and growing and, by 2008, the last farmers inside the park prior to designation were relocated in a consensual and peaceful manner,” USAID reported.

Of course, I’m not suggesting that Peru’s budget isn’t tight and it would be simple for the state to allocate funds to protect the park, but isn’t it extremely unconvincing at best or downright absurd in the long-term to effectively claim, apparently with such assurance and finality, “there is no money” and there never can or will be? Indeed, that claim is concretely undermined by the huge sums that have already been channelled to CIMA for the park – not just the US$10 million from USAID but another 10 million from other sources, including the US-based Moore Foundation – to say nothing of the recently-launched “Peru’s Natural Legacy” (PNL) initiative, a public-private partnership led by the state and ostensibly aimed at ensuring the sustainable funding of Peru’s entire PNA system “in perpetuity.” In 2019 it was announced that US$140 million seed capital had been pledged – half by the state and the other half by partners such as Moore, the Global Environment Facility and the World Wide Fund for Nature (WWF) – and that the initial focus would be on the 38 PNAs in the Amazon.

It is revealing that when I asked Moore if they would be prepared to step in and cover the costs of running the park if there happened to be no revenue from the carbon project, a spokesperson assumed that wouldn’t be necessary because Cordillera Azul is covered by the PNL, although CIMA’s Varillas Cueto subsequently told me the park has not received – and will not receive – any funds from that initiative. A spokesperson from Peru’s PNAs agency SERNANP told me something else again: that Cordillera Azul is part of the PNL, that in 2021 some PNL funds did go towards it but that won’t happen in the future, and that the PNL, somewhat ironically, is looking at Cordillera Azul as a “model.”

But what if, for whatever reason, there was no money coming in from the carbon project? Might the PNL help protect the Cordillera Azul?

“In the hypothetical case of that mechanism [the carbon project] not existing, we would consider PNL donation resources for the park in the short-term at least,” a SERNANP spokesperson told me, in a significant admission.

In a subsequent email that position was repeated: “Although there are no PNL donations directed to Cordillera Azul at this time given [the carbon project], if there were no REDD mechanism or a CIMA, we would see how to support the gaps in the short term,” the SERNANP spokesperson said. “The challenge would be to design a mechanism that closes the gaps in a predictable and long-term manner, which is in a way what we want to achieve through CIMA for the park.”

According to CIMA’s Varillas Cueto, over the last few years their annual budget for running the park has been between US$1.2 and 2 million, while SERNANP has provided a few 100,000 dollars per annum too – not a huge sum in total. If the Peruvian state, someone else or some combination of the two – whether the PNL or some other initiative – was prepared to stump up that money, surely it would destroy the argument made for the carbon project’s “additionality” and the claims made by companies like Shell and many others that their customers’ emissions are being offset and therefore it’s fine to carry on polluting elsewhere.

Who, it is impossible not to wonder, might be interested in doing that?


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