Verra has used nearly a million “hot air” carbon credits to compensate for bogus offsets generated by rice-paddy projects backed by energy giant Shell in China, Climate Home News can reveal. In a case described as “shocking” and “deeply alarming” by experts, the leading carbon registry replaced 960,000 credits issued for rice-field methane reduction activities that had been found to overstate emissions cuts with an equivalent number of junk credits from other failed Chinese rice projects, its records show. “It’s frankly unbelievable that Verra considers it appropriate to compensate for hot air credits with other hot air credits,” said Jonathan Crook, policy lead at Carbon Market Watch. “To pretend this is a satisfactory resolution is both absurd and deeply alarming.” Shell’s links to bogus offsets Shell is linked to both sets of projects, which Verra ruled as no longer valid in August 2024 after detecting “unprecedented” failures in their implementation. Last year, an investigation by Climate Home News and Dialogue Earth cast serious doubt on whether any emissions-cutting activities were carried out on the ground at all. In response to those findings, a Shell spokesperson said “the projects in question are not managed or operated by Shell”. But the oil and gas major was closely involved in 10 rice-farming programmes in China as their “authorised representative” and, as Climate Home News reported last year, partly relied on their worthless carbon offsets to market “carbon-neutral” liquefied natural gas (LNG). Regulatory filings in the US show that Shell, acting as a broker, last year offered to potential buyers the same carbon credits that have now been used as partial compensation for the 10 projects. Sep 30, 2025 Carbon markets Zimbabwe forest carbon megaproject generated millions of junk credits Verra is seeking compensation for offsets issued “in excess” by the controversial Kariba REDD+ scheme. But the registry’s track record in obtaining remedies raises concerns Read more Nov 6, 2025 Carbon markets EU’s new climate target lines up multibillion-dollar boost for carbon markets Analysts estimate the EU will buy at least 50 billion euros worth of carbon credits in the 2030s to help meet its emissions-cutting goals, giving a huge boost to the market in offsets Read more For more than a year, Verra failed to replace nearly 2 million worthless credits issued by the 10 projects, after the Chinese developers stopped responding to the registry’s communications with them. Shell abandoned the programmes shortly after Verra ordered that the credits should be compensated. The credits were primarily used by Shell to offset real greenhouse gas emissions created by its vast fossil fuel operations. Other users of the phantom rice-farming offsets include Chinese state-owned fossil fuel firm PetroChina, Singapore-based DBS Bank and UK energy supplier OVO Energy. In early October this year, updates to Verra’s registry showed that 960,000 excess credits across the 10 projects had been replaced with an equivalent number of credits drawn from four separate rice-cultivation programmes that were also axed at the same time. Those original credits had not been voided and technically remained available to the account holder, even though Verra scrapped the underlying programmes and unsuccessfully pursued their representatives for redress. The Chinese company behind the four projects failed to respond to Verra’s requests, leaving it unclear whether the credits will ever be replaced. Verra’s rules in the spotlight A Verra spokesperson told Climate Home News that the account holder, “which requested to remain anonymous”, asked the registry to cancel those credits and, subsequently, Verra decided to count them towards the compensation process for the other 10 sham projects. While Climate Home News could not verify the identity of the account holder in question, Shell declared in public filings that, in 2024, it had marketed those 960,000 credits to potential buyers. Verra said its rules allow any active credits to be used to cover excess issuance elsewhere, even if those credits themselves need to be replaced. Commenting on this specific case involving the sham rice-farming projects, the spokesperson added: “While the source projects have been rejected and must address their own over-issuance, the credits used here were valid at the time of cancellation.” Grayson Badgley, a research scientist at climate solutions non-profit CarbonPlan, said this sort of logic might allow Verra to balance its credit ledger but does nothing to help the planet’s atmosphere. “This isn’t just about following the rules – it’s about making sure that the carbon market supports meaningful climate action,” he added. Compensation orders piling up Carbon market experts told Climate Home News the case raises serious questions about Verra’s ability to safeguard the integrity of its carbon credits at a critical time when a rapidly growing number of bogus offsets require compensation. Over 10 million worthless credits produced by the discredited Kariba forest protection megaproject in Zimbabwe, and already used by corporations to back up their green claims, need to be replaced after Verra found the threat to the forest had been exaggerated in the project’s original forecast. Zimbabwe forest carbon megaproject generated millions of junk credits In a separate development, Verra is now also seeking the compensation of around 4.5 million credits issued by four vast tree-planting schemes in China. The registry axed the projects last Friday after a year-long review failed to confirm they had been approved by government authorities – a key requirement – and that official documentation had not been falsified. Shell tied to failed tree-planting schemes While a Chinese company was in charge of the projects’ implementation, official documents show that, for years, Shell had been directly involved as an “authorised representative”. This role, which the energy giant also held in the rice paddy schemes, gave the firm all the “applicable rights and responsibilities” in relation to the activities. Shell exited all four tree-planting projects in December 2024, a month after Verra informed the firm it would start the investigation that ultimately led to their cancellation last week. Shell was informed of an investigation into the projects A month later, the energy firm left the projects Shell was informed of an investigation into the projects A month later, the energy firm left the projects “We purchase and retire a range of Verra-certified credits and were disappointed to learn of the issues Verra identified with these projects and are looking at Verra to replace any credits that were issued under these projects,” a Shell spokesperson told Climate Home News. For Carbon Market Watch’s Crook, Verra’s unwillingness to deal with “huge loopholes” is not only deeply troubling but also counterproductive as it undermines trust in the registry, while leaving it exposed to future misconduct by unscrupulous actors. “Rather than take real accountability for this scandal, Verra seems intent on propping up a collapsing house of cards,” he added, referring to the compensation of rice-farming credits. The post “House of cards”: Verra used junk carbon credits to fix Shell’s offsetting scandal appeared first on Climate Home News.

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