Climate policy experts call for “excluding or phasing out offsets from carbon-pricing schemes and other climate policy processes”
A call to “act on the science”.
A new analysis from a team of climate policy experts warns that carbon offsets are an obstacle to meeting the global temperature targets in the Paris Agreement. The authors calls for decision makers to “exclude offsets from carbon pricing schemes”. The paper was published in Nature magazine last week.
The authors argue that,
Achieving the global temperature targets set in the Paris climate agreement requires deep, rapid cuts in greenhouse-gas emissions, and therefore the swift phase-out of fossil fuels. Many factors stand in the way. One of the most pernicious is carbon offsets.
The paper is titled, “Carbon credits are failing to help with climate change — here’s why.” The authors are Andrew Macintosh of Australian National University, Gregory Trencher of Kyoto University, Benedict Probst of the Max Planck Institute for Innovation and Competition, Munich, Shanta Barley of the University of Western Australia, Danny Cullenward of the University of Pennsylvania, Thales West of Vrije Universiteit Amsterdam, Don Butler of Australian National University, and Johan Rockström of the Potsdam Institute for Climate Impact Research.
The authors write that reliance on offsets has “fatal flaws”. It’s difficult to tell whether carbon offsets represent genuine emissions reductions or “hot air”. Additionality is equally difficult to ensure. Many carbon offsets have been generated from projects that would have taken place without the carbon funding. And projects that are supposed to sequester carbon have to lock away the carbon dioxide permanently and not release the gas back to the atmosphere at some future date.
Most carbon-offset schemes fall foul of one or more of these requirements. Thus, offsets undermine decarbonization by enabling companies and countries to claim that emissions have been reduced when they have not. This results in more emissions, delays the phase-out of fossil fuels and diverts scarce resources to false solutions.
Turbocharge demand
Despite these fundamental problems, in 2024 the rules for Article 6 of the Paris Agreement were gavelled through on the first day of COP29. The first phase of the Carbon Offsetting and Reduction Scheme for International Aviation started its first phase in January 2024. These two carbon trading schemes are “set to turbocharge demand for carbon credits,” the authors note.
The authors outline the problems with carbon offsets.
Evaluating the emissions reductions achieved by offset projects is “extremely difficult” because calculations require comparing what actually happened with the “business-as-usual” projection. The authors take the example of avoided deforestation:
[C]alculating the climate benefits from a project that avoids deforestation involves comparing a forest’s actual carbon stock to that in a counterfactual scenario in which the project did not happen. The hypothetical nature of such calculations invites manipulation and can tempt project developers to overestimate business-as-usual emissions to generate more credits.
Measuring emissions and carbon stocks can lead to errors. The amount of soil organic carbon varies across landscapes and over time. Accurately measuring changes in the carbon stock is extremely difficult.
Droughts and wildfires can release carbon stored in trees and soils. Forests can be cleared for timber or agriculture. Most offset scheme require carbon sinks to be maintained for 40 years or less. The authors note that this is inadequate:
Given that CO₂ emissions require thousands of years to be reabsorbed by Earth’s climate system, credited removals need to lock away carbon for a similar period to genuinely neutralize the warming caused by the emissions that are claimed to be offset.
Judging the quality of carbon credits is “close to impossible for buyers” because of the complexity and lack of transparency in carbon markets. In any case the priority is often to buy the cheapest possible credits.
Offsets distract from ending fossil fuels
The authors note that there is a conflict of interest involved in attempting to improve the integrity of offset schemes. Voluntary carbon market registries rely on project registrations and credit issuances for revenue. They compete for market share. Improving integrity standards means less revenue.
“These interlinked issues make integrity failings inevitable,” the authors write. “The science reflects this, with studies repeatedly showing that few of the major offset types in use today deliver real, additional or permanent abatement.”
The authors also note that allowing carbon offsets into carbon pricing schemes reduces the carbon price faced by polluters. The carbon price in most such schemes is too low to encourage industries to cut emissions low enough to meet Paris climate targets. “As a general rule,” they write, “the schemes that have achieved prices in line with these targets have not allowed offsets.”
The authors conclude that,
Mitigating climate change requires ending the burning of fossil fuels. Offsets distract from this crucial task. We call on policymakers to act on the science by either excluding or phasing out offsets from carbon-pricing schemes and other climate policy processes.