Common Criticisms of Carbon Offsets

Concerns About How Offset Credits Are Used

Examples of criticisms:

  • “Carbon offsets allow polluters to go on polluting” (i.e., they are a form of “greenwashing”)
  • “Carbon offsets are not a long-term solution and can ‘lock-in’ high-carbon infrastructure”
  • “Carbon offsets create an incentive to avoid regulating certain sectors and industries”

These kinds of criticisms are not so much about whether carbon offsets are a valid form of climate change mitigation, but rather whether they create “perverse” incentives. Carbon offsets were conceived as a way to facilitate investment in cost-effective mitigation options that organizations would otherwise not be able to access. The temptation, however, can be for organizations to use carbon offset credits to achieve all (or large parts) of their GHG reduction goals, rather than make the investments needed to significantly reduce their own carbon footprint. The counterproductive result can be that they continue to pursue high-emitting activities – and invest in high-emitting equipment and facilities – effectively “locking in” higher emissions over the long run. This concern is the primary reason that many observers advocate for treating carbon offsets as a complement to aggressive internal climate action, not a primary means of mitigation.

Another possible perverse incentive created by carbon offsets is to discourage needed regulation.[1] Regulations that require GHG reductions could deprive project developers of revenue from selling offset credits because the reductions would no longer be “additional” (see Additionality). Project developers would likely resist such regulatory changes. From a climate policy perspective, therefore, carbon offsets have been viewed as an interim solution — a way to accelerate action in the near term, but one that must ultimately (and explicitly) be replaced by more comprehensive policy action in the future.

[1] See Wara and Victor (2008).