Chris Lang’s piece repeats a familiar but incomplete critique of carbon markets. After having spent two decades in this space, I believe I have a perspective here. It is one thing to argue that carbon markets must be better governed; it is another to claim that decades of carbon trading have made no difference at all and that companies buying carbon credits do not decarbonize faster. That assertion does not reflect the evidence.
Trove Research, now part of MSCI, examined the emissions performance of more than 4,000 global companies and found that companies using material quantities of carbon credits were, on average, decarbonizing at twice the rate of companies that did not use them. MSCI’s later publication on the same topic found that carbon-credit users were more likely to disclose emissions, reduce Scope 1 and 2 emissions, reduce emissions intensity, set climate targets, and earn more revenue from low-carbon activities.
That matters because it directly contradicts the claim that carbon credits function as a “license to pollute.” The evidence cited by MSCI points in the opposite direction: voluntary carbon credit use has been associated with faster internal emissions reductions, not slower ones.
A more honest debate would acknowledge the real question: not whether carbon markets are perfect, but whether they can be structured with strong integrity, community rights, and transparent benefit-sharing so that they mobilize capital for climate action in the Global South. That is the case many of us are making. Indeed, that was the entire desire of us to help Liberia design a carbon market with first degree integrity.
Carbon markets are not a substitute for regulation, industrial decarbonization, or fossil-fuel phaseout. But dismissing them outright ignores the empirical evidence and overlooks their potential to channel finance from the Western world toward climate action and development in the Global South.
P.S. I am a Zimbabwean who studied in South Africa. My firm, Gordian Knot Strategies, is registered in Portland OR USA and works in South America, Asia, Africa, Europe, and the U.S.
A quick follow-up, Chris. Redd-Monitor itself cites the Oeko-Institut study, whose authors concede that 'it would be inherently challenging to develop a robust and representative study design that would be suitable to empirically test whether the use of carbon credits has a causal effect on internal emission reductions.' That's an admission of methodological limits, not a finding. It can't carry the weight of the claim being made.
Yes, it's a methodological problem. Which is the point. The Oeko-Institut is arguing that it is not possible to claim a causal effect between a company buying carbon credits and reducing its emissions.
The Oeko-Institut report is titled, "Correlation or Causation? Challenges in Assessing the Effect of Carbon Credit Use on Corporate Climate Action".
Here's how the authors explain the point of the report:
"This study aims to assess the challenges and prospects of investigating whether and how the use of carbon credits causally affects internal emission reductions. To this end, we first review the existing literature on the role of carbon credits in corporate climate action and the correlation between carbon credit use and internal emission reductions with a view to drawing preliminary conclusions and identifying research gaps. This is supplemented by interviews with companies to gain insights into which factors may affect internal emission reductions and the use of carbon credits. Based on these findings, the study discusses challenges in developing a study design to empirically assess the causal effect between corporate carbon credit use and internal emission reductions."
And here's the Summary of the report, which is where that quotation comes from:
"In this study, we assess the challenges and prospects of investigating whether and how the use of carbon credits affects corporate internal emission reductions. To this end, we review the existing literature related to the use of carbon credits and corporate emission reductions, conduct qualitative interviews, and investigate the possibility of developing a study design for assessing whether the use of carbon credits has a causal effect on internal emission reductions.
"Our analysis shows that, in theory, the use of carbon credits could enhance or reduce internal emission reductions, or have no effect at all, depending on the companies’ climate strategies. Empirically, several studies find a positive correlation between the use of carbon credits and internal emission reductions. This positive correlation cannot be confirmed by a recent peer-reviewed study, which finds no significant relationship between the use of carbon credits and internal emission reductions. However, for a few companies, the study finds qualitative evidence suggesting that carbon credits can compete with internal decarbonisation efforts.
"The question of whether carbon credits substitute or complement internal emission reductions remains unanswered as none of the existing studies provides causal evidence. Hence from the existing literature, no clear conclusion can be drawn as to whether the use of carbon credits has a causal effect on internal emission reductions or not, and if so, whether that effect would be positive or negative.
"The interviews suggest that carbon credits are used for various purposes and that companies have changed their approaches towards using carbon credits over time: in response to increased media focus on integrity issues in the voluntary carbon market along with greenwashing accusations, many companies have become more reluctant to use carbon credits to make offsetting claims.
"Finally, we find that when exploring the relationship between the use of carbon credits and internal emission reductions, several factors need to be considered, including potential endogeneity, data limitations and structural changes in companies’ approaches towards using carbon credits. Therefore, it would be inherently challenging to develop a robust and representative study design that would be suitable to empirically test whether the use of carbon credits has a causal effect on internal emission reductions."
Chris Lang’s piece repeats a familiar but incomplete critique of carbon markets. After having spent two decades in this space, I believe I have a perspective here. It is one thing to argue that carbon markets must be better governed; it is another to claim that decades of carbon trading have made no difference at all and that companies buying carbon credits do not decarbonize faster. That assertion does not reflect the evidence.
Trove Research, now part of MSCI, examined the emissions performance of more than 4,000 global companies and found that companies using material quantities of carbon credits were, on average, decarbonizing at twice the rate of companies that did not use them. MSCI’s later publication on the same topic found that carbon-credit users were more likely to disclose emissions, reduce Scope 1 and 2 emissions, reduce emissions intensity, set climate targets, and earn more revenue from low-carbon activities.
That matters because it directly contradicts the claim that carbon credits function as a “license to pollute.” The evidence cited by MSCI points in the opposite direction: voluntary carbon credit use has been associated with faster internal emissions reductions, not slower ones.
A more honest debate would acknowledge the real question: not whether carbon markets are perfect, but whether they can be structured with strong integrity, community rights, and transparent benefit-sharing so that they mobilize capital for climate action in the Global South. That is the case many of us are making. Indeed, that was the entire desire of us to help Liberia design a carbon market with first degree integrity.
Carbon markets are not a substitute for regulation, industrial decarbonization, or fossil-fuel phaseout. But dismissing them outright ignores the empirical evidence and overlooks their potential to channel finance from the Western world toward climate action and development in the Global South.
I would be more than happy to discuss directly with you if you want to discuss further. I am at spenrith@gordianknotstrategies.com
Thanks,
Sean
P.S. I am a Zimbabwean who studied in South Africa. My firm, Gordian Knot Strategies, is registered in Portland OR USA and works in South America, Asia, Africa, Europe, and the U.S.
A quick follow-up, Chris. Redd-Monitor itself cites the Oeko-Institut study, whose authors concede that 'it would be inherently challenging to develop a robust and representative study design that would be suitable to empirically test whether the use of carbon credits has a causal effect on internal emission reductions.' That's an admission of methodological limits, not a finding. It can't carry the weight of the claim being made.
Yes, it's a methodological problem. Which is the point. The Oeko-Institut is arguing that it is not possible to claim a causal effect between a company buying carbon credits and reducing its emissions.
The Oeko-Institut report is titled, "Correlation or Causation? Challenges in Assessing the Effect of Carbon Credit Use on Corporate Climate Action".
https://carbonmarketwatch.org/wp-content/uploads/2025/11/Final-Report-Use-of-carbon-credits-incl-summary.pdf
Here's how the authors explain the point of the report:
"This study aims to assess the challenges and prospects of investigating whether and how the use of carbon credits causally affects internal emission reductions. To this end, we first review the existing literature on the role of carbon credits in corporate climate action and the correlation between carbon credit use and internal emission reductions with a view to drawing preliminary conclusions and identifying research gaps. This is supplemented by interviews with companies to gain insights into which factors may affect internal emission reductions and the use of carbon credits. Based on these findings, the study discusses challenges in developing a study design to empirically assess the causal effect between corporate carbon credit use and internal emission reductions."
And here's the Summary of the report, which is where that quotation comes from:
"In this study, we assess the challenges and prospects of investigating whether and how the use of carbon credits affects corporate internal emission reductions. To this end, we review the existing literature related to the use of carbon credits and corporate emission reductions, conduct qualitative interviews, and investigate the possibility of developing a study design for assessing whether the use of carbon credits has a causal effect on internal emission reductions.
"Our analysis shows that, in theory, the use of carbon credits could enhance or reduce internal emission reductions, or have no effect at all, depending on the companies’ climate strategies. Empirically, several studies find a positive correlation between the use of carbon credits and internal emission reductions. This positive correlation cannot be confirmed by a recent peer-reviewed study, which finds no significant relationship between the use of carbon credits and internal emission reductions. However, for a few companies, the study finds qualitative evidence suggesting that carbon credits can compete with internal decarbonisation efforts.
"The question of whether carbon credits substitute or complement internal emission reductions remains unanswered as none of the existing studies provides causal evidence. Hence from the existing literature, no clear conclusion can be drawn as to whether the use of carbon credits has a causal effect on internal emission reductions or not, and if so, whether that effect would be positive or negative.
"The interviews suggest that carbon credits are used for various purposes and that companies have changed their approaches towards using carbon credits over time: in response to increased media focus on integrity issues in the voluntary carbon market along with greenwashing accusations, many companies have become more reluctant to use carbon credits to make offsetting claims.
"Finally, we find that when exploring the relationship between the use of carbon credits and internal emission reductions, several factors need to be considered, including potential endogeneity, data limitations and structural changes in companies’ approaches towards using carbon credits. Therefore, it would be inherently challenging to develop a robust and representative study design that would be suitable to empirically test whether the use of carbon credits has a causal effect on internal emission reductions."