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Oil Firms like Occidental Petroleum Use Offsets to Claim Green Barrels

In January, Occidental Petroleum announced its accomplishment of something that no oil company had done before. The company had sold a shipload of crude that was 100% carbon-neutral. The two-million-barrel cargo to India was designed to produce more than a million tons of planet-warming carbon during its lifecycle.

The Texas-based driller said that it had entirely offset the impact by purchasing carbon credits. The credits are financial statements generated by projects that reduce or avert greenhouse gas emissions like solar power farms or mass tree plantings. The polluting companies can buy these credits from the project owners. Such companies use the credits to make claims of offsetting the carbon emissions.

The details of the Occidental transaction have never been previously reported. Two sources involved in the deal said that the driller paid an amount as much as $1.3 million for the credits or almost 65 cents per barrel. A barrel of oil sells at $60 a barrel right now. Occidental claims that these credits make the two-million-barrel cargo carbon-neutral as they represent an equal amount of greenhouse gas removed from the atmosphere.

The arrangements show a growing trend. Oil and gas companies across the world are trying to market their products as cleaner using a range of controversial methods. Methods range from buying credits to power drilling with renewable power. Some also invest in expensive and commercially unproven technology to capture and store emissions.

To secure the future of the fossil fuel industry, these moves have been designed. There are cases where they are also designed to generate profits: companies have begun seeking a premium price for what they call cleaner petroleum products.

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