Royal Dutch Shell has partnered up with EKI Energy from India to develop nature-based solutions for carbon capture.
The JV is expected to invest $1.6 Billion over a 5-year period to develop 155 million Carbon Credits.
EKI Energy, is the largest carbon credit developer and supplier from the developing world. They currently serve over 2,500 corporate customers with ~70% based in India.
The JV will work on conserving, enhancing, and restoring natural ecosystems such as grasslands, wetlands, forests, agriculture, and blue carbon.
Shell has set a target to become a net-zero emission energy business by 2050.
The carbon credits generated from these projects can be used either by Shell for its internal consumption or to sell in the open market.
A carbon credit is a certificate signifying that one tonne of carbon dioxide emission has been reduced from the atmosphere.
This can be done through nature solutions, such as planting trees, or through industrial applications such as using carbon-reducing agents at emission points.
These carbon credits can be traded to help more polluting entities meet increasingly stringent carbon-emission norms.
Shell and EKI have signed on the exclusivity clause in contract to form the JV.
The carbon credits generated from the projects the JV undertakes will be shared in proportion to the investment Shell or EKI makes.
If Shell invests 75% of the capital in a project, it will get 75% of the carbon credits generated from it.
Positive sentiment driving this share is due to the growth of net-zero commitments being made as the world focuses on lowering the carbon footprint.