In January, Occidental Petroleum announced it had accomplished something no oil company had done before: It sold a shipload of crude that it said was 100% carbon-neutral. While the two-million-barrel cargo to India was destined to produce more than a million tons of planet-warming carbon over its lifecycle, from well to tailpipe, the Texas-based driller said it had completely offset that impact by purchasing carbon credits under a U.N.-sponsored program called CORSIA. Carbon credits are financial instruments generated by projects that reduce or avert greenhouse-gas emissions such as mass tree plantings or solar power farms. The projects’ owners can sell the credits to polluting companies, who then use them to make claims of offsetting their carbon emissions. Details of the Occidental transaction have not been previously reported. Two sources involved in the deal told Reuters that the driller paid about $1.3 million for the credits – or about 65 cents per barrel. Oil currently sells for more than $60 a barrel. Occidental and the U.N. program say such credits make the two-million-barrel cargo carbon-neutral because they represent an equivalent amount of greenhouse gas removed from the atmosphere by the projects generating the credits. The moves are designed to secure a future for the fossil fuel industry in a world where investors, activists and regulators demand action to stop climate change. In some cases they are also designed for profit: Companies have begun seeking a premium price for what they call cleaner petroleum products. NO CLEAR STANDARDS Carbon credit programs range from national efforts to global ones like the Carbon Offsetting and Reduction Scheme for International Aviation run by the United Nations. Companies and nonprofit organizations such as VERRA and SustainCERT are charged with issuing and verifying credits under these programs. They certify that the projects generating credits are leading to the promised amount of reduced emissions and would not have been built without the credit income. But there are no uniform standards for how to calculate the full climate impact of fossil fuels, or how to properly offset it with environmental projects, industry experts say. Companies buying credits are also not obliged to disclose their cost or origin – a problem because they can vary widely in price and quality. In Occidental’s case, the credits were generated between 2016 and 2019 by solar, wind and other clean-energy projects in emerging economies such as India, Thailand and Turkey, and were verified by VERRA. VERRA and other verifiers, however, have since stopped approving renewable energy projects in those nations to generate offsets after concluding last year that they had become competitive enough to be built even without offset credit revenue. Occidental defended the deal, saying it could kick off a new market for oil offset with credits that directs money to green-energy projects. “We can be a big part of the global solution,” said Richard Jackson, Occidental’s president of operations for onshore resources and carbon management. TREES IN SPAIN Occidental and the cargo’s buyer, India’s Reliance Industries, did not comment on whether Reliance paid a premium for the shipment. But other oil-and-gas companies are eager to create a market where climate credentials allow them to command higher prices. That could allow them to recoup the full cost – or more – of credits or other measures that allow for the low-carbon labeling. Lundin Energy, an independent driller with operations in Norway, is one of the companies that sees a market opportunity in crude with a low-carbon designation. The company plans to spend $35 million to plant 8 million trees in northern Spain and Ghana – something it says will allow it to generate its own credits to offset greenhouse gas emissions from its fossil fuels. Lundin was the first oil company in the world last year to receive independent certification it was producing low-carbon oil based on its reduction of emissions in producing oil from its Edvard Grieg field in Norway. It also aims to certify low-carbon oil from the Sverdrup field, also in Norway – Western Europe’s biggest – which Lundin co-owns with a consortium of partners. Cleaner drilling operations, however, have a limited environmental benefit. At least 80% of greenhouse gases from oil are emitted after extraction from the ground, according to consultancy IHS Markit. GREEN OIL SANDS? Across the Atlantic, Canadian producers in the oil sands have a bigger challenge. Producers there emit three to five times more carbon than the worldwide average because more energy is needed to extract the oil, according to Rystad Energy, a global consultancy. Its producers are hoping to change that. Suncor Energy, for example, has pledged to cut the amount of carbon it emits per barrel produced 30% from 2014 levels by 2030 to contribute to Canada’s climate goals and address shareholder pressure to reduce its emissions. It will do so by improving energy efficiency and investing in renewable energy technologies, such as wind farms, said Chief Sustainability Officer Martha Hall Findlay. She said Suncor will consider certifying those lower-carbon barrels.