According to the new study, the world’s largest fossil fuel company will need to plant forests covering larger than North America to offset their current reserves, according to the new study.
Analysis of 200 major oil, gas and coal companies shows that even the cheapest offsetting technology cannot make burning fossil fuels economically viable when taking into account environmental costs.
Scientists at Yale University and European institutions calculated the losses the companies would spend 673 billion tons of carbon dioxide locked in their proven reserves. The results depict a distinct picture that offsets limitations.
The numbers don’t add up
Using the current European carbon market price is $83 per ton, 95% of the world’s largest fossil fuel companies will have negative values if forced to offset their emissions. Even if planting trees, the cheapest offset option is $16 per ton, with 64% of the companies still losing money.
The study introduces a concept called “Net Environmental Valuation” that reduces offset costs from the company’s market value. Saudi Aramco, worth $2.22 trillion, would shrink to $483 billion if it had to pay a tree-based reserve mortgage.
Forests larger than mainland
Space requirements reveal the toughest challenges to offset. Compensation to compensate for all current fossil fuel reserves will require 24.75 million square kilometers of 24.75 million square kilometers, a region covering all regions of North America and parts of South America.
The calculation has perfect conditions and ignores the reality: these lands have been occupied by cities, farms and natural ecosystems. The researchers acknowledged that their estimates were “upper caps, not definite guides.”
Hidden ecological costs
In addition to spatial issues, the study also reveals neglected biological limitations, which makes large-scale tree planting problematic. Trees require specific nutrients, especially nitrogen and phosphorus, which have been restricted in many ecosystems. Large amounts of afforestation may actually release stored soil carbon in some areas, thus destroying the entire offset effort.
This study highlights most of the key details missing in the offset discussion: tree-related fungi conduct nutritional mining. When trees are planted in nutrient-poor soil, symbiotic fungi break down existing organic matter to feed the trees, possibly capturing more carbon than the trees.
Key findings that challenge offset:
- Water Competition: New Forests Increase Evaporation, May Lower Local Water Tables
- Temporary storage: Tree carbon is vulnerable to fires, storms and diseases
- Food security risks: A large number of tree planting can replace agricultural land
- Soil carbon loss: Some ecosystems lose stored carbon when converted to forests
Social cost reality check
When researchers applied EPA-estimated carbon costs ($190 per ton), each fossil fuel company’s study showed negative values. This shows that if a company pays for the real environmental cost of its products, it will not be profitable.
The global implications are shocking. Fixing current fossil fuel reserves through plant cultivation will cost $10.8 trillion, accounting for about 11% of global GDP. Using direct air capture technology to raise the price to $6737 trillion, equaling seven years of total human economic output.
Mathematics beat marketing
Why is this important? Many fossil fuel companies are promoting offsets as climate solutions. For example, Shell plans to offset 120 million tons per year by 2030. But mathematics reveals a fundamental problem: there is simply not enough suitable land on Earth to offset viable strategies to continuously extract fossil fuels.
The study reinforces what climate scientists have long argued: Reducing emissions offsets them. Even if every technological challenge is solved, economic and space requirements can offset the expensive attention of the real solution, thus leaking fossil fuels on the ground.
The study does not completely refute forest conservation. Natural climate solutions remain valuable for biodiversity, ecosystem services and carbon storage. But as a replacement for emission reduction? These numbers tell a different story altogether.
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