'Offsetting is better than doing nothing at all.'

‘Travellers should keep CO₂ emissions to a minimum – or at least offset their emissions.’ Many providers and users of carbon credits use this argument or others like it. They also like to point out the positive impacts of carbon offsetting on development – an offset project may reduce the use of firewood to heat water in developing countries, or solar panels may be reducing the use of diesel generators.

Carbon credits reduce the pressure for structural changes

Critics, on the other hand, argue that even offset projects that may provide rural development benefits in the global South are still harmful to the climate. This is because the purchase of carbon credits slows public pressure for structural changes in high-emission sectors and industrialized countries. Without this pressure, though, the use of fossil fuels will not be phased out sufficiently soon. British scientist Kevin Anderson points out that behaviour that gives rise to a lot of emissions is justified with the argument that buying carbon credits ‘neutralises’ the damage to the climate. Offset credits thus hinder a re-thinking of individual and collective consumption behaviour. This pattern of justification can be easily observed in the tourism sector, which assertively rejects criticism of growth plans by stating that its growth is climate neutral and that it is, moreover, channelling money into carbon offset projects in developing countries. Because offsetting is ever more blatantly turning into greenwashing of further growth, in October 2009 the travel company ‘Responsible Travel’ stopped offering its customers the option of offsetting their travel-related emissions.

The link between offsetting and the justifying of climate-damaging growth is particularly evident in the international aviation industry, the fastest-growing industrial sector in the world. In 2016, to defuse the criticism that the sector with its vast growth plans was abdicating any responsibility for climate change, the international aviation industry introduced a package of measures to make its additional growth from 2020 ‘carbon neutral’. However, this 'neutrality' will not be achieved by reducing emissions. Instead, the sector plans to offset its greenhouse gas emissions by buying carbon credits. Airports, too, are increasingly using carbon offsetting to justify the controversial expansion of runways: the construction of a new runway, so the argument goes, does not contribute to climate change because the emissions would be offset through the purchase of carbon credits.

The additional emissions reduction is not verifiable

The claim to be climate neutral raises another issue. Ultimately the sellers of carbon credits cannot prove that the credits are really based on an additional reduction in emissions. The proof is based on the assumption that the future is knowable and known: each project that offers carbon credits pretends to know exactly how high the emissions would have been in a hypothetical situation without the offset project. This hypothetical situation is contrasted with emissions measured in the actual situation in which the project does take place and reduces emissions that supposedly would have been released without the carbon offset project. The difference between the emissions in these two scenarios gives the quantity of emissions that have supposedly been saved – and hence the quantity of carbon credits that a project can sell. If this additionality of the emissions reduction does not in fact exist – that is, if the emissions would still have been reduced even without the offset project – the concentration of greenhouse gases in the atmosphere increases because the carbon credit buyer's additional release is not really compensated by an additional emission reduction.

A number of studies indicate that more than 80 per cent of CDM projects sell carbon credits that are not based on additional reductions. Projects that sell carbon credits on the unregulated, voluntary market are also frequently criticised for selling credits that are not based on additional emission reductions. Many projects that originally sought CDM registration sell at least some of their carbon credits on the voluntary carbon market. In addition, since 2015 the UN's ‘Climate Neutral Now’ scheme has been marketing carbon credits from CDM projects to companies and organisations in the voluntary carbon market that are not under any binding obligation to reduce their emissions.

Carbon credits can lead to conflict

Furthermore, carbon credits create new problems. Projects that involve forest conservation, afforestation or agriculture must always entail a change of land use if they want to generate carbon credits: the use of land in the actual project must differ from that in the hypothetical land use scenario. This usually means restrictions on use and stricter monitoring of the areas designated as part of a project that sells carbon credits. This repeatedly leads to conflict – especially if the rights to own and use the land on which an offset project takes place are disputed. In such cases, the recipients of the carbon credit payments are not necessarily the people affected by the land use restrictions. Those who are actually affected are often not appropriately compensated.

Voluntary offset schemes make offsetting in other sectors acceptable

Another problem that arises in connection with voluntary offsetting schemes that promise ‘climate neutrality’ is that they make the idea of ‘compensation’ acceptable in other sectors. They are the start of an incipient paradigm shift that, for example, is making it easier to obtain consent for controversial mining projects in protected areas or particularly species-rich habitats.

Offsetting schemes weaken the ‘polluter pays’ principle

Finally, there is a risk that expanding the offsetting approach weakens the ‘polluter pays’ principle. If companies fail to adhere to limits laid down in law, they have in the past faced the risk of civil or criminal prosecution, with financial consequences that cannot be calculated precisely in advance. Limits on pollution or destruction or biodiverse habitats therefore provide a clear incentive to avoid polluting or destroying the environment. The increasing acceptance of offsetting in environmental legislation and spatial planning results in environmental pollution and destruction being legalised through the purchase of compensation credits. In other words: where exceeding the legal limits would previously have resulted in civil or criminal proceedings, it is now merely necessary to pay a fee in advance. This makes it possible for companies to calculate the cost of exceeding pollution limits established by law. It means that companies can dismiss the opposition of local communities to environmental pollution or destruction with the argument that more nature is being restored elsewhere to compensate for the destruction or pollution in the locality.

This article is part of our dossier "New Economy of Nature".