Carbon offsets are in the news again. What should you do?

January 27, 2023

Over the past year, carbon offsets, something used by most airlines and many airports, have come under increased scrutiny. In particular, there has been high-profile media coverage claiming that they largely don’t do what they say they do.

The accusation has been that they are both a scam run by the scheme operators, and a form of greenwashing by the companies buying them,

For example, in the Summer of 2022, Last Week Tonight with John Oliver devoted a whole episode to carbon offsetting. In it, Oliver concluded that offsetting was “like a kids’ choice award. It doesn’t really mean much, but it will help you look a little bit greener.” As part of the show, Oliver also took aim at the airline industry’s use of offsets, choosing to zero in on Ryanair in particular.

Now there has been a new report.

A “Carbon Con?”

This time it’s potentially more damaging.

While John Oliver’s show can be dismissed as entertainment (and there were plenty of holes in the episode), this one comes from Germany’s Die Zeit and the UK’s Guardian newspapers, along with NGO ‘Source Material.’ Source Material’s press release announcing their findings sounds damning.

Source Material led with the words – “The Carbon Con: The world’s biggest companies, from Netflix to Ben & Jerry’s, are pouring billions into an offsetting industry whose climate claims appear increasingly at odds with reality”

The claim is that out of 100 million carbon credits analysed, “only a fraction of them resulted in real emissions reductions.”

Quoted in the original piece, Barbara Haya of the carbon trading project at the University of California called out aviation, saying that –“Companies are making false claims and convincing customers they can fly guilt-free.”

One of the main claims in the report concerns the verification body Verra.

Verra is one of the organisations that assesses whether carbon offsetting schemes are legitimate. Source Material accuses Verra of “rubber stamping” credits, having issued one billion of them in 15 years. One reason for that is that Source Material says that Verra issues credits for “avoided deforestation.”

In fact, this is an area that John Oliver also highlighted last year. In his show, Oliver claimed that credits sold to avoid areas of forest being cut down are largely a sham, and Source Material seems to agree. In particular, Source Material, The Guardian and Die Zeit say that 94% of these deforestation credits “are likely to be worthless.”

Major companies that have bought into these credits or offer them to their customers include Disney, Samsung, Ben & Jerry’s, Netflix – and airlines Air France and United Airlines (United CEO Scott Kirby is himself ambivalent on carbon offsetting as he explained in his Sustainability in the Air Podcast interview).

Similarly, the report says that environmental consultancy South Pole, which includes Delta Airlines among its airline customers, was involved in a forestry protection project in Zimbabwe. The claim is that the threat to the forest was overstated by up to 30x and that credits were sold on this basis.

Source Material says that South Pole wanted to use more conservative calculations for the credits, but was overruled by Verra.

The Source Material / Zeit / Guardian report has since led to a series of follow-on articles, all citing the claims of “phantom credits.”

For example, Brisbane City Council is now being criticised for spending money on offsets in China, rather than trying to reduce emissions at home. Meanwhile, energy giant Shell was called out for spending $450 million on carbon offsetting programmes, “as fears grow that credits may be worthless.”

The response

Verra’s response to this report mainly takes issue with the methodology used by Source Material, The Guardian and Die Zeit.

We don’t think it’s an effective rebuttal, as unlike the original report, it’s filled with jargon and talks a lot about ‘REDD’ (“Reducing Emissions from Deforestation and forest Degradation”).

Most consumers, or indeed, directors in the boardroom, won’t know what ‘REDD’ is. They will, however, understand the original articles and headlines. As a result, perhaps the most effective responses came from other carbon-offsetting players not mentioned in the report.

Gold Standard is a competing certification body to Verra. It posted on LinkedIn that it does not issue credits for deforestation protection. Gold Standard also showcased a table from Germany’s öko institut, where Gold Standard, unlike other carbon offset auditing schemes, scored highly against every single environmental and social safeguard criterion.

The message here is that, whatever the truth of the deforestation reports, not every auditing scheme is equal. Some have more stringent standards than others.

Meanwhile, Erik Wilhlborg of Danish company Klimate linked back to the three-year-old Oxford University Offsetting principles, which he held up as a good foundation for any carbon offsetting strategy.

They can be summarised as:

Use offsets where immediate carbon reductions are not possible. Shift to carbon removals offsets, where carbon is taken out of the atmosphere (which would rule out, for example, cooking stove projects), and focus on long-term carbon removal, where the carbon is removed permanently or almost permanently.

Our view & six principles to follow

Ultimately, offsetting can have some value. However, we strongly recommend any organisation involved in offsets follow these guidelines.

1. Do your homework

What is the actual impact of the programme? Does it really remove CO2? Who is certifying it? What are their certification criteria?

2. Don’t decide on price alone

If your only criterion is price, your approach probably won’t have much credibility. That’s because, sadly, there are some unscrupulous operators who sell dubious credits to organisations that want to tick the net zero box as cheaply as possible.

3. Avoid deforestation protection credits

Given the controversies around this, it would be advisable to avoid credits from these schemes for now. Instead, focus on projects that proactively capture and store CO2.

4. Think local

Ideally, any offsetting programme should do more than deliver carbon credits. It should do actual good in the area where you are based or where many of your customers are based.

An excellent example of that is the Etihad Mangrove Forest, which has a number of advantages. Mangroves are extremely effective when it comes to carbon storage. But importantly, this project has worthwhile biodiversity and environmental protection benefits in its own right.

5. Be clear in your communication

Carbon offsets are not a net zero silver bullet. No advertising or marketing material should claim they are.

In fact, last week, there was a ruling against Ryanair by the Dutch advertising regulator about that point. The regulator ruled that Ryanair’s claims that offsetting makes your flight sustainable are misleading. As a result, Ryanair is now changing language like “fly greener” to “compensate your CO2 emissions.”

So statements that offsetting somehow results in ‘green’ or ‘guilt free’ flying fail the credibility test. They will, as in the case of the Netherlands, be struck down.

Instead, talk more about where that offsetting money goes and what good it does. As we said in our greenwashing report, tell the story instead of relying on dubious claims. Looking again at Etihad’s Mangrove Forest project, that’s an excellent example of where such storytelling works.

6. Most importantly, work towards net zero

Finally, any sustainability or net zero programme which solely relies on offsetting is not credible. Offsets exist to help hard-to-decarbonise sectors like aviation, while the hard work of actually reducing industry emissions goes on in the background.

Be clear that this is a temporary step that works right now, but that you are aware of the need to decarbonise and reach net zero in the medium term – by 2050 or sooner. Show how you are doing that.

Do you want to know more? Read our reports on aviation’s road to net zero. We can also help make your net zero plans happen, get in touch.