BARCELONA: Few people call it eco-friendly when a company like Royal Dutch Shell, to pump natural gas and make petroleum products, disturbs coral reefs and damages the habitats of rare desert truffles and vulnerable birds. But the energy giant may have found a way to turn local environmental losses into a plus for biodiversity - and its business. To make up for lost habitats in Qatar, where it is building a vast natural gas operation, Shell plans projects in other parts of the emirate to increase the antelope population and help to preserve endangered turtles and sea-cows. "Sometimes you say there are no good solutions, but then you can agree on compensating measures elsewhere," said Jeroen van der Veer, the chief executive of Shell. "We are an extractive industry and we do build large installations," but Shell "can only get those new projects if we are in harmony with society, and certainly with local society." Companies like Shell are facing new threats to their business. Communities that oppose big mining and drilling projects have caused costly delays, while governments have used the environmental records of companies against them - as happened to Shell in Russia in 2006, when it ceded control of the Sakhalin Island oil and natural gas project to Gazprom under threat of huge fines by the country's environmental regulators. At the same time, after decades of failing to win adequate support for their policies, large sections of the conservation and environmental movement are aligning their strategies with those of financiers and big business to improve the chances of meeting their goals. That has opened up opportunities for companies to demonstrate a good track record on biodiversity management and to burnish their green credentials by participating in market-style systems they have helped to design and that have the approval of campaign groups. The best known of these new markets involves generating and trading permits to emit carbon dioxide, a greenhouse gas. Under binding regulations in the European Union, companies like Shell buy or sell permits based on whether they overshoot or come in beneath their pollution targets. So far, the EU initiative has had little impact on emissions, and it has been heavily criticized for enabling financiers to profit from carbon-cutting projects in the developing world, while providing industries with windfall profits even as they continue to pollute in Europe. The kind of experiment that Shell is pursuing in Qatar could be even more controversial. Such projects could, one day, allow companies that damage habitats and ecosystems to earn "credits" by protecting habitats and ecosystems elsewhere. Backers of this approach say it should become standard business practice, with the credits traded on markets like carbon-emission permits. But while carbon dioxide is the same gas everywhere, ecosystems differ. No two areas of biodiversity are identical, which makes valuing compensation for environmental damage extremely difficult. Critics also say that such compensation projects could become a way for extractive industries to spend less on improving their site operations, giving them what some campaigners call "a license to trash" in exchange for a poorly monitored, hard-to-measure commitment. "Offsets are actually a zero-sum game," said Richard Steiner, professor of environmental policy and marine conservation at the University of Alaska Fairbanks. "Eventually, there will be nothing left with which to offset anything - what then?" Van der Veer said Shell aimed for maximum damage mitigation at its operating sites, and would use offsets only to make up for residual damage. At the same time, Shell officials say that if their offsetting activities produce a net environmental gain, the company could sell surplus biodiversity "credits" to other companies. In a similar vein, Tom Albanese, chief executive of Rio Tinto, the mining company, said his company could generate new revenue streams by improving local community livelihoods and helping to dissuade people from further degrading forest and other natural habitats, and by improving plant and animal life on large areas of disused land owned by company. That land represented "a biodiversity buffer that also could be used to create the next generation of green credits," Albanese said. Already, companies like Shell and Rio Tinto build schools and clinics and provide water for communities near their operations, and pay compensation for local damage to protected areas. But some companies are now moving toward a system of comprehensive offsets for all their environmental effects - a revolution in business behavior, said Kerry ten Kate, director of the Business and Biodiversity Offset Program at Forest Trends, a nonprofit group that promotes market-based methods of sustainable forest management. Forest Trends jointly runs the program - involving more than 40 companies, banks and government agencies - with Conservation International and the Wildlife Conservation Society to help design and implement biodiversity offsets. Ten Kate acknowledged the scope for abuse of voluntary projects. But she warned that governments would be more likely to regulate and legislate to halt biodiversity loss if companies failed to make a voluntary system work effectively. Julia Marton-Lef