Common Criticisms of Carbon Offsets

Concerns About Carbon Offset Quality

Examples of criticisms:

  • “Carbon offset credits do not represent valid GHG mitigation; if they are used as a substitute for real climate action, they only make climate change worse.”
  • “Carbon offset projects have adverse impacts on local communities and may make other environmental problems worse.”

These criticisms are probably the most immediate concern for most offset credit buyers. Carbon offset credits are of little use in mitigating climate change if they are not a valid substitute for an organization’s own internal GHG reductions. Unfortunately, despite the efforts of carbon offset programs, a number of independent studies have identified serious problems with some carbon offset credits. For example, studies of the world’s two largest offset programs – the Clean Development Mechanism (CDM) and Joint Implementation (JI), both administered by the United Nations under the Kyoto Protocol – suggest that up to 60-70% of their offset credits may not represent valid GHG reductions.[1] Other critiques have highlighted instances of carbon offset projects that harmed local communities or resulted in broader environmental damage.[2] An official report commissioned by the United Nations in 2012 cataloged many of the CDM’s shortcomings and identified areas of potential improvement.[3]

These critiques are troubling and should give pause to prospective buyers of offset credits. Major carbon offset programs, however, have responded to at least some of the concerns raised by these studies.[4] These responses include amending quantification methodologies to prevent over-estimation of GHG reductions,[5] as well as reconsidering the eligibility of certain project types.[6] Nevertheless, it is still wise to approach the carbon offset market with healthy skepticism.

Buyers can employ a number of strategies to improve their likelihood of acquiring higher-quality offset credits. In the next section, we explain the essential elements of a “high-quality” carbon offset credit and indicate some basic questions buyers can use to vet potential purchases. In Strategies for Avoiding Lower Quality Offset Credits, we provide some general strategies for avoiding “low-quality” offset credits.

[1] The primary concern is that a large number of offset credits come from energy sector projects that have significant sources of other revenue besides offset credits, suggesting that they would have happened anyway and do not represent additional mitigation. Other identified issues include concerns about over-estimation of emission reductions, e.g., for industrial gas destruction and other project types (Alexeew et al. 2010; Cames et al. 2016; Gillenwater and Seres 2011; Haya and Parekh 2011; Kollmuss et al. 2015; Kollmuss and Lazarus 2010; Lazarus et al. 2012; Ruthner et al. 2011; Schneider 2009; Schneider et al. 2010; Spalding-Fecher et al. 2012).

[2] See, for example, Dufrasne (2018) as well as here.

[3] See Spalding-Fecher et al. (2012).

[4] Although most critical studies of carbon offsets have focused on the CDM and JI because of their high profile, many of the same issues are likely to arise in other programs as well. For some programs – like Verra (i.e., VCS) and the Gold Standard – this is because they incorporate CDM methodologies by reference, so there is substantial overlap in the kinds of projects they certify. In other cases, programs have used CDM methodologies as a starting point in developing their own standards. Although a number of programs have followed approaches that differ from the CDM, no program should be considered categorically free of all concerns about offset quality.

[5] The CDM Executive Board, for example, adopted amendments and clarifications to its methodology for destruction of HFC-23 emissions to address demonstrated concerns about over-production of this gas purely for the purpose of producing more offset credits. Such projects are now disallowed. However, similar concerns for other project types – e.g., N2O abatement at adipic acid plants – have not been fully addressed.

[6] Verra and the Gold Standard, for example, have solicited public input on whether to exclude from eligibility clean energy projects in wealthy and middle-income countries, on the grounds that these projects have a low likelihood of being additional.