Analyzing the Carbon Offset Market: A False Promise for Climate Action?

     Simply put, a carbon offset is a market-based mechanism where an entity like a business or government is able to pay another company to offset their carbon footprint, usually through paying for that second company to pollute less or provide some sort of conservatory service. This technicality allows companies to advertise products or services as being “carbon-neutral” or “net-zero” when the actual service itself isn’t. This begs the question, do these offsets actually provide what’s being advertised, or are they just another lackluster attempt at greenwashing?

    Carbon offsets were first written into law in the 1970s through amendments to the US’s Clean Air Act. The beginnings of these practices were wholeheartedly supported by fossil fuel executives and conservative politicians in western countries all over the world. Dr Mark Trexler, who was hired by the World Resources Institute in 1988 to oversee the first offset projects calls them “(purely) a philanthropic exercise” in an interview with Carbon Brief. He says later that the intention of these offset projects was never to fully stop climate change, the goal was to use them “as an interim measure until policy gets going.” In 1997 as a result of the Kyoto Protocol, many countries and states around the world began using carbon offset markets as a way of reaching their promised goals. Later, in 2012, the Kyoto protocol carbon markets fell apart and were later rewritten into the Paris Agreement.

    The most obvious problem with this system is that a company that is paying for the offset can maintain business as usual without needing to actually change anything about their practices. This practice enables polluters to continue their emissions while paying someone else to simply offset their growth. The total amount of emitted carbon stays the same, but nobody has to actually change their practices.

    A second serious problem with the carbon offset market is that the so-called sustainable projects may not be cutting emissions at all. According to research by Corporate Accountability and The Guardian in 2023, out of the top 50 emission offset projects offering carbon credits for sale, 78% of them were categorized as likely junk due to one or more fundamental failings that undermine their promised emission cuts. Another 16% of them were also deemed to be problematic. As of the writing of The Guardian’s article, 1.16 billion dollars’ worth of carbon credit had been traded so far from the 78% junk projects, and the 50 projects investigated made up almost a third of the entire global carbon market. Another study published in 2017 by The European Commission found that “85% of the projects covered in the analysis and 73% of the potential supply of CDM credits from 2013 to 2020 are unlikely to deliver real, measurable, and additional emission reductions.” The usage of these credits could have led to an increase in emissions of over 3.5 billion tons of CO2 in that timeframe. 

    So, the question posed earlier remains. Do these offsets actually provide what’s being advertised, or are they just another lackluster attempt at greenwashing? At this point it’s safe to say that these systems as they are do not provide the sort of benefits they claim and are just a way for companies to slap green, guilt-free labels on their goods or services. If a carbon offset market is going to be used responsibly, there needs to be heavier regulations on the quality and staying power of offset projects as well as on the amount that can be bought by an entity. They also need to be seen and used as a temporary solution to allow for the controlled and rapid change from fossil fuels, instead of an excuse to keep emitting.