Cost to offset emissions: 2¢ extra per litre

CALGARY • Canadian drivers will now have the option of paying more per litre of gasoline to offset the emissions from their tailpipes as Shell Canada Ltd. debuts a program across the country that has become popular in Europe.

Shell announced Thursday it would roll out its Drive Carbon Neutral program in Canada that will allow customers filling up their cars and trucks at Shell gas stations to purchase carbon offsets on their gasoline. The company will cover the initial cost of the program but beginning in 2021, participating drivers can choose to pay an additional 2 cents per litre to purchase carbon offsets from a reforestation project in British Columbia.

“Based on our consumer research and the focus groups that we undertook, a lot of consumers will be interested in this. It's something they can do themselves in the same way that people are looking at buying more locally grown food or buying airline tickets with carbon offsets,” Michael Crothers, president and country chair of Shell Canada, told Financial Post.

In many countries and in specific carbon tax regimes in Canada, carbon offsets or carbon credits can be purchased from projects that capture or reduce CO2 and other greenhouse gas emissions. Shell says it's hopeful that a more widespread regulatory regime and market for carbon offsets will be developed in Canada.

The company is confident that Canadians will choose to participate in the program and pay an additional 2 cents per litre for their gasoline in addition to the carbon tax they currently pay, which amounts to roughly 7 cents per litre for gasoline in Alberta, Saskatchewan, Manitoba, Ontario and New Brunswick this year. In B.C., drivers pay a carbon tax of roughly 9 cents per litre for gasoline.

Crothers said the program will allow consumers that can't afford to buy an electric vehicle to offset their emissions. The offsets will initially come from the Darkwoods Forest Carbon Project, which is a Nature Conservancy of Canada project to protect 630 square kilometres of inland rainforests and oldgrowth forests.

Shell Canada's Haguebased parent company Royal Dutch Shell PLC began rolling out the program in the Netherlands in 2018 that allowed customers to optin to an extra charge of one euro cent per litre of gasoline they purchased, which would be used to purchase carbon offsets. The program then expanded to the United Kingdom, Germany, Austria, Switzerland and Denmark.

Crothers said roughly 10 per cent to 12 per cent of customers in Europe opted into the program when it was initially rolled out but participation rate has increased over time to roughly 20 per cent, which he described as “phenomenal.”

While Shell may be the first retail fuel operator to offer carbon offsets in North America, the company's new offering fits with a wider trend among consumer-focused businesses across the continent, said Patrick De

Haan, GasBuddy's head of petroleum analysis in Chicago.

“Delta Airlines was one of the first that I'm aware of to add an option to customers to offset the carbon emitted from their seat on their flight,” De Haan said, adding that he expects more companies to begin offering this type of program as “it's a coming trend.”

De Haan said he would expect customers to be more willing to participate in Shell's program during periods of low gasoline prices but less willing when the price of fuel rises again — likely after the current COVID-19 pandemic passes. Average regular gasoline prices in Canada stood at around 99.50 cents per litre on Thursday, compared to 111.7 cents a year ago, Gas Buddy data show.

De Haan also expects the program to be a tougher sell to consumers that already pay a carbon tax.

“It's a feel-good purchase,” De Haan said, adding “I think this would be popular when prices are low because people would feel internally guilty to offset their emissions.”

If an equivalent program were rolled out in the U.S., customers would pay 6 cents per gallon, De Haan estimated, adding that he would expect such a program to have higher participation rates in environmentally-conscious states such as California rather than oil-producing states like Texas.

Shell's Crothers said the company would also invest in forest restoration or other conservancy projects with its own funds, aside from the contributions of its customers, and pointed to a partnership announced Thursday with the Tsilhqot'in First Nations in B.C.

The project with the Tsilhqot'in is separate from the Darkwoods project, which will use funds from drivers paying the extra 2 cents per litre for carbon offsets at its fuel stations. Crothers said none of the funding for the tree-planting project with the Tsilhqot'in will come from the retail fuel program. The tree-planting will be managed by the Tsilhqot'in National Government (TNG).

Shell will fund the planting of 840,000 native trees in parts of northern B.C. that have been damaged by fires in recent years as part of the company's US$200-million global program to invest in natural ecosystems.

“Our communities were devastated by the wildfires in 2017, which were the result of poorly managed forests,” said Chief Joe Alphonse, TNG Tribal chairman, in a release.

“The reforestation project is an opportunity for economic growth within our Nation and will help ensure that the forests are managed for the benefit of all here now, and for future generations,” Alphonse said.

OUR COMMUNITIES WERE DEVASTATED BY THE WILDFIRES.