Carbon offsets are an obstacle to real climate solutions

SOMO’s ‘Facing the facts: carbon offsets unmasked’ series debunks eight myths promoted by the offset industry.

Reality check:

Every argument the industry makes in favour of carbon offsets must be confronted with a significant body of evidence showing that they do not actually do what they claim to do. The logic of carbon offsetting does not work: there are significant structural flaws; it is based on false equivalences, and the offset industry is riddled with conflicts of interest. Moreover, protecting forests and other ecosystems, which is clearly necessary, is not the same as establishing carbon offset projects. The conflation of these two issues has been a core fallacy in the debate. The former can be done far better if we get rid of the latter, as we discuss below.

Offsets are used to prevent regulatory action by governments

While the industry often argues that without carbon markets, corporations would ‘do nothing’, this narrative overlooks the fact that governments can compel industries to act. In fact, it is due to substantial corporate lobbying – including at UN climate events – that governments have been pushed to accept the notion that more regulation is unnecessary because polluting industries acting voluntarily and according to market incentives is more ‘efficient’. Offsets constitute a significant part of this narrative. The offsetting industry has created a dangerous illusion that the market is helping solve the climate and deforestation crises. The very problems that were created by the market and market-based policy assumptions in the first place.

Offsetting ‘hard-to-abate’ emissions

The industry heavily promotes the use of offsets to address the so-called ‘hard-to-abate’ emissions. Emissions that companies claim are difficult for them to decrease. However, there is no clear understanding or transparency around what constitutes a ‘hard-to-abate’ emission, and the concept is open to abuse. In cases where emissions reduction measures are more expensive than buying carbon credits, companies can simply consider them as ‘hard-to-abate’ emissions. By doing so, companies can avoid taking actual measures needed to reduce emissions. There is ample evidence(opens in new window) that the current use of carbon credits is not linked to hard-to-abate emissions.

The fallacy of preventing deforestation

Most forest-based offset projects are part of a framework called Reducing Emissions from Deforestation and Forest Degradation (REDD+ ), which was introduced in the UN climate negotiations in 2005 and implemented primarily in tropical countries. The vast majority of REDD+ projects focus on changing how forest-dependent populations use their forests, particularly their traditional agricultural practices. REDD+ and project developers frame these practices as a threat to the carbon stored in the trees. Experts have repeatedly criticised(opens in new window) this approach. REDD+ does not address the main drivers of deforestation, such as industrial agriculture or logging.

After almost 20 years, the concept introduced with the promise that it would reduce emissions from forest destruction has failed(opens in new window) to drive down large-scale deforestation. For example, a 2023 scientific study(opens in new window) examining 26 REDD+ conservation project sites in six countries on three continents found that most projects had not significantly reduced deforestation. For projects that did, reductions were substantially lower than claimed. An investigation into all the offset projects involving conservation areas in Cambodia revealed a significant decrease in forest cover. On average, the forest cover in these areas dropped(opens in new window) from 88% in 2008 to 46% in 2017, with one area losing all of its forest cover.

Even when governments are directly involved in setting up carbon markets, such as with the Australian Carbon Credit Unit Scheme, the results are hardly better. A 2024 scientific study(opens in new window) of 182 projects aimed at regenerating Australian ecosystems found only a negligible increase in woody and forest cover (0.8%) across 3.4 million hectares. These minor improvements largely mirrored changes in adjacent comparison areas, suggesting that factors other than the project activities were predominantly responsible for observable changes.

The offsetting industry has often cited Brazil as an example of the benefits of forest-based carbon offsets. This country has been the largest beneficiary of REDD investments, particularly from Germany and Norway. Deforestation rates in the Brazilian Amazon went down after 2004. However, research suggests that this reduction had much more to do(opens in new window) with a massive government conservation and regulation program than with REDD funding. Meanwhile, under the government of Jair Bolsonaro, a right-wing president who relaxed environmental regulations, deforestation significantly increased. In 2022, after Lula da Silva returned to power, deforestation rates started to slow down again. The evidence is that government policy in Brazil has been more instrumental than REDD projects when it comes to deforestation. Deforestation in the Brazilian Amazon is still nevertheless high, and these forests and communities are increasingly vulnerable(opens in new window) to climate-related impacts.

Another dimension of the industry argument is that offsets are essential if we want to fund protection for forests, which are termed as ‘carbon sinks’. However, this claim ignores the evidence that land under Indigenous control (opens in new window) does much better (opens in new window) than land under a state or private management scheme. But Indigenous Peoples and other forest-dependent communities are often disenfranchised by offset projects. Displacing forest populations and turning their forests into a business opportunity does not protect the forests or communities that depend on them.(opens in new window) It simply makes the people and forests vulnerable and dependent on volatile economic interests.

In a nutshell

Carbon offsets are far from the best option for addressing climate change and deforestation. They obstruct and delay much-needed governmental regulatory action by creating an illusion of positive corporate activity. Nor has offsetting been effective in combatting deforestation or protecting standing forests and other ecosystems. On the contrary, REDD+ projects have obscured the drivers of deforestation and contributed to disenfranchising the communities whose role continues to be vital in preserving forests and other ecosystems.