The illusion of carbon offsets in achieving our goals

According to the Intergovernmental Panel on Climate Change (IPCC), carbon offsetting refers to any activity that compensates for the emissions of CO₂ or other greenhouse gasses (CO₂-eq) by providing an emission reduction elsewhere (1). These offsets can be purchased voluntarily, functioning as carbon trading system, allowing companies to ‘balance’ their carbon emissions.

Unfortunately, the credibility of carbon offsets is called into question, casting doubt on the legitimacy of credits purchased by globally renowned corporations to support their carbon-neutral or net-zero assertions in sustainability reports while continuing to emit GHG (2).

The difficulty comes from three main reasons:

• The poor quality of many credits, linked to over-crediting practices, little transparency on how estimates are calculated (3) and international leakage (4).
• The ambiguity around the notion of ‘last resort’ which normally guarantees that any recourse to offsetting should complement maximized internal reduction strategies and achievements rather represent a primary solution or alternative.
• In all cases, even when credits are of high quality, they ought never be used to claim a firm’s ‘carbon neutrality’ since they do not represent an actual reduction within the perimeter of the company or organization but can only contribute to an objective of neutrality at a global level (5).

Many carbon offsetting projects do not result in real, measurable, and additional emission reductions. Independent studies, including one by the European Commission, indicate a high failure rate of 85% for offset projects, questioning their effectiveness and the likelihood that funded project activities would happen anyway without offsetting (6).

Finally, outside any consideration of quality, the contribution of voluntary carbon offsets falls short of the challenge, representing in 2019 less than 1% of the required measures to follow a 2°C trajectory and a 0.4% effort for staying on course towards a 1.5°C target (7). In many ways, they represent an outdated climate tool in the times of a planetary emergency, that may even have delayed the necessary shift to the absolute reduction strategies called by science.

Recommendations:

• Prioritize direct and indirect emissions reductions within all 3 scopes of your own operations and supply chains (Greenhouse Gas Protocol). Offsetting should be a supplementary strategy rather than a primary approach to achieving carbon neutrality.
• Exclude carbon credits from your carbon accounting monitoring and emissions reduction trajectory, in alignment with best recommended practices and in anticipation of upcoming legislation.
• If offsetting is chosen to strictly compensate residual emissions aside of your carbon accounting, ensure project integrity by prioritizing projects with high quality standards and maximize impact by adhering to robust climate methodologies such as the Gold Standard. Consider adopting nature-based solutions projects for a holistic approach to
• Privilege insetting as a more effective alternative to offsetting by focusing on GHGe and carbon capture within your value chain. These initiatives should involve actions that not only address emissions but also have positive effects on communities, landscapes, and ecosystems associated with the value chain.
• Support the net zero ambition at a global level and drop inaccurate and impossible “climate neutral” claims at an institutional level.

Read the synthesis paper to learn more about why carbon offsetting shouldn’t be accounted for as emissions reduction.

(1) IPCC meetings go carbon-neutral. Read here.

(2) Carbon Credits and Credibility:  A Collaborative Endeavor. Read here.

(3) What Are Carbon Offsets & Why Are They Controversial. Read here.

(4) Deforestation leakage, policy spill-overs and the case for integrated management. Read here.

(5) Climate Change 2022, Mitigation of Climate Change, Frequently Asked Questions. Read here.

(6) How additional is the Clean Development Mechanism? Analysis of the application of current tools and proposed alternatives. Read here.

(7) Aligning the Voluntary Carbon Market with the Paris Agreement. Read here.