Key Takeaways

• Oil and Gas sector companies like Shell and Eni are amongst the top retirees while Delta Air Lines is the biggest retiree in the aviation sector
• Volkswagen and AUDI represent automotive sector among top buyers
• Renewable Energy and REDD+ protocols dominate retired credits
• African and Asian countries hold a significant share of retirements

Introduction

Based on our analysis of top sectoral retirements, in this article we will delve into each sector to identify the top retirees within the sectors.  This article aims to provide a more comprehensive picture of the buyer side of the VCM by looking into the top hundred retiring entities. For our analysis, data has been taken from the four major registries, i.e., American Carbon Registry (ACR), Climate Action Reserve (CAR), Verra, and Gold Standard (GS). Furthermore, it is important to note that the data only captures those retiring entities who have chosen to disclose their offsets purchases to these four registries. More than 50% of the retirements remain anonymous.

Top Retirees Encompass a Diverse Range of Sectors

Figure 1: Top Ten Retirees (Historical)

Source: ACR, CAR, Verra and GS

Looking at the historical data, two major Oil and Gas companies, i.e., Shell and Eni, are amongst the top five corporate retirees in the VCM. While Shell is the biggest retiree, it is closely followed by Delta Air Lines from the aviation sector. Two major automobile manufacturers, namely Volkswagen group and AUDI are also among the top ten buyers of carbon offsets. This is in line with what we saw in the previous article, with Oil and Gas, Aviation sector and Automotive manufacturers among the top five sectors.

Shell actively uses carbon credits as a part of its decarbonisation strategy, with their Environmental Products team sourcing high-quality carbon credits from projects around the world. Moreover, these credits, mostly generated from nature-based solutions, can also be combined with some of their products and are offered to their customers. Telstra also allows its customers to support accredited international and Australia-based climate projects to offset their GHG emissions.

Eni’s usage of offsets comprises of mainly Natural Climate Solutions, accompanied by application of technological solutions. On the other hand, Delta Air Lines has been supporting the LEAF (Lowering Emissions by Accelerating Forest Finance) Coalition and have made significant purchases of carbon offsets. In recent news, Delta has been facing a lawsuit over its carbon neutrality claims due to its offset purchase.

Volkswagen also purchases offsets from climate protection projects which meet international standards. AUDI, on the other hand, has stated that it purchases offsets from Gold Standard and Verra.

Analysing 2022 retirements, Aviation sector seems less active.

Out of the top hundred retirees in the VCM, the top ten retirees in 2022 are shown in figure 2. Oil and Gas sector retirees capture the top two positions last year followed automotive manufacturers. However, comparing top historical retirees above with the 2022 retirees, aviation sector has moved out of the top ten list. While Oil and Gas sector major Shell continues to be among the leaders, Eni surpassed Shell last year with close to 50% of its historical retirements being in 2022. The two companies were joined by Tokyo Gas and PetroChina, contributing to Oil and Gas sector’s leading position.

We also saw some new sectors entering the top ten space, with Nestle being a significant buyer of offsets last year. The company claims that their corporate net zero program doesn’t use offsets outside their value chain, some of their brands do purchase high quality carbon credits from Natural Climate Solutions.

Figure 2: Top Ten Retirees in 2022

Source: ACR, CAR, Verra and GS

Protocol-wise Retirements – REDD+ and Renewable Energy leads

For the top hundred retirees in the VCM, majority of the retirements are in REDD+ protocol, followed by Renewable Energy. Together these two take up around 63% of the total share of retirements. These two together are followed by ‘Other Tech Solutions’ Fuels & Transport and Soil-based- Avoidance, to make the top five protocol categories.

Figure 3: Protocol Shares for Top 100 Retirees

Source: ACR, CAR, Verra and GS

A look at the protocol-wise retirements for the top ten retirees reveals that apart from LSB industries, most of the entities are purchasing REDD+ and Renewable Energy offsets. While LSB industries is completely using technological solutions-based offsets, Interface, Inc. is the only one invested in CCS projects and energy efficiency as well. Soil-Based – Removal offsets are also quite popular, although not as much as Renewable Energy and REDD+ credits.

Figure 4: Protocol-wise Retirements for Top 10 Retirees

Source: ACR, CAR, Verra and GS

Registry-wise Retirements- Verra is the Preferred Registry for Majority of Retirees

CAR and Verra are the two most popular registries amongst the top hundred retiring entities, with Verra taking up more than half the share of retirements with its Verified Carbon Standard (VCS) and its Climate, Community & Biodiversity (CCB) Standard programs. On the other hand, the smallest share of retirements (4%) is held by ACR.

Figure 5: Registry-wise Shares for Top 100 Retirees

Source: ACR, CAR, Verra and GS

Retirements by Region- Asian and African Regions lead Geographical Retirements

When we look at the geographical retirement trends for the top hundred retirees, USA emerges as the region with the maximum retirements. The next three positions are all occupied by Asian countries- India, Indonesia, and China. The top ten list is dominated by Asian and African nations.

Figure 6: Top Ten Regions

Source: ACR, CAR, Verra and GS

Conclusion

The in-depth analysis of the top hundred corporate entities mirrors the sectoral retirement trends that we analyzed in our previous article. Oil and Gas sector is a major purchaser of carbon credits and majority of the retired credits come from Renewable Energy and REDD+ protocols. Moreover, a significant number of developing nations lead the geographical retirements. We will be delving deeper into the buyer side of the VCM in our upcoming webinar.

Analyst Contact:

Urvashi Thakur (uthakur@ckinetics.com)