Net-zero pipe dreams: WHY FOSSIL FUELS CANNOT BE CARBON NEUTRAL Investigation

Carbon Market Watch analyzed 18 "carbon neutral" fossil fuel claims, primarily involving liquefied natural gas (LNG), and found that every claim failed to meet basic criteria for environmental integrity and transparency. The report argues that fossil fuels cannot be carbon neutral because the firms involved are not aligned with 1.5°C pathways and rely on flawed "tonne-for-tonne" offsetting. Key failures include the omission of Scope 3 emissions in one-third of claims, a total lack of transparency regarding the price paid for carbon credits, and the use of impermanent nature-based sinks to offset long-term fossil carbon emissions. The report recommends that fossil fuel firms cease these claims, stop new exploration, and shift toward a "contribution" model for climate finance.

• All 18 analyzed "carbon neutral" fossil fuel claims are classified as greenwashing because none of the firms followed the necessary mitigation hierarchy—reducing emissions first before using offsets.
• The use of nature-based carbon credits to offset fossil fuels is logically flawed because fossil carbon remains in the atmosphere for 300 to 1,000 years, while biological sinks are impermanent and vulnerable to reversals like fire and disease.
• One-third of the assessed claims failed to include Scope 3 emissions (combustion), which typically represent 70% or more of the total lifecycle emissions for LNG.
• There is a total lack of transparency regarding the cost of carbon credits, with no firm publicly disclosing the price paid, leading to concerns that credits are bought at extremely low rates (below $5) to avoid actual emission reductions.
• Firms failed to provide precise, cargo-specific emission estimates, often relying on average estimates that ignore unique variables such as leakage, vessel type, and port distances.
• Several claims relied on outdated or non-additional renewable energy credits, such as a 2011 hydropower project used by Petronas and a 2009 hydropower project used by Toho Gas and DGI.
• The report estimates that Occidental may have paid less than $1.5 per credit for its "carbon neutral" oil cargo shipment to India.

APA

Carbon Market Watch (2021). Net-zero pipe dreams: WHY FOSSIL FUELS CANNOT BE CARBON NEUTRAL Investigation. https://carbonmarketwatch.org/wp-content/uploads/2021/10/CMW_Net-zeroPipeDreams.pdf

Chicago

Carbon Market Watch. Net-zero pipe dreams: WHY FOSSIL FUELS CANNOT BE CARBON NEUTRAL Investigation. 2021. https://carbonmarketwatch.org/wp-content/uploads/2021/10/CMW_Net-zeroPipeDreams.pdf.

Wikipedia

{{cite report |author=Carbon Market Watch |title=Net-zero pipe dreams: WHY FOSSIL FUELS CANNOT BE CARBON NEUTRAL Investigation |date=October 2021 |url=https://carbonmarketwatch.org/wp-content/uploads/2021/10/CMW_Net-zeroPipeDreams.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{carbonmarketwatch2021netzero, author = {{Carbon Market Watch}}, title = {{Net-zero pipe dreams: WHY FOSSIL FUELS CANNOT BE CARBON NEUTRAL Investigation}}, institution = {Carbon Market Watch}, year = {2021}, month = oct, url = {https://carbonmarketwatch.org/wp-content/uploads/2021/10/CMW_Net-zeroPipeDreams.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }