The Carbon Offset Fallacy

Solving climate change one imaginary carbon credit at a time.

Carbon offsets have become a popular tool for businesses and individuals looking to neutralize their carbon footprint. The idea is simple: if you emit carbon dioxide, you can "offset" it by funding projects that remove or reduce an equivalent amount of CO₂ elsewhere. It's like buying indulgences from the Catholic Church to erase your sins.

Sounds great, but the reality is far messier. Critics argue that offsets are a smokescreen, allowing companies to continue polluting while claiming environmental responsibility. Supporters say they’re a necessary part of tackling climate change.

So, are carbon offsets a genuine climate solution or just a convenient excuse for business as usual?

Why Talk About Carbon and CO₂?

When discussing climate change, carbon dioxide gets most of the attention because it’s the primary greenhouse gas responsible for global warming. While other gases—methane (CH₄), nitrous oxide (N₂O), and other gases—also contribute to climate change, CO₂ makes up about 76% of human-caused emissions.

Burning anything, whether it's fossil hydrocarbons or biomass during a forest fire, releases CO₂ in the combustion process. And we burn a lot of coal, oil, and natural gas for energy. Deforestation further compounds the problem by reducing the planet’s ability to absorb CO₂.

While other greenhouse gases can be more potent, CO₂ is the longest-lived. It can stick around in the atmosphere for hundreds to thousands of years, making it the main driver of long-term climate change.

That’s why when we talk about "carbon emissions" or "carbon offsets," we’re mostly talking about CO₂, even though other greenhouse gases are factored in under the term CO₂-equivalent (CO₂e).

It's worth noting that CO₂ is not the worst environmental issue that humans cause. Many land use changes that destroy natural habitats for countless species and all kinds of toxic pollution of land, air, and water are just a couple examples.

How We Measure Carbon Emissions

If you want to offset your carbon footprint, you first need to measure it. Scientists and policymakers use metric tons of CO₂-equivalent (tCO₂e) as the standard unit of measurement. There are three primary ways to calculate emissions:

Direct Measurement

Some emissions (like those from power plants) can be tracked using sensor-based monitoring systems that measure the amount of CO₂ released.

Estimations & Emission Factors

For most activities, emissions are estimated based on energy use. For example, burning one gallon of gasoline emits ~8.89 kg of CO₂. Similarly, electricity consumption, flights, and manufacturing have standard conversion factors.

Life Cycle Assessment (LCA)

Some products and activities require a full life-cycle analysis to measure emissions from production to disposal. This is particularly relevant for industries like fashion, electronics, and food production.

Governments and businesses rely on these calculations to set climate goals, track progress, and determine how many carbon offsets they need to purchase to appear environmentally responsible. A "carbon credit" represents an emission reduction of 1 metric ton of carbon dioxide.

Concept Behind Offsetting

Many individuals and businesses want to be "net-zero" (CO₂ emissions). They may try to reduce their current emissions by switching to electric appliances, installing solar panels, eating less meat, and buying an EV, but some emissions will remain. Pretty much any economic act involved some externalized cost to the natural world, including emissions.

Carbon offsets are a way to pay someone else to reduce CO₂ emissions for you so you can lower your carbon footprint or achieve "net zero." This scheme allows companies and individuals to "neutralize" their carbon footprint by funding projects that either remove CO₂ from the atmosphere or prevent new emissions. Individuals and businesses can pay companies such as TerraPass and Atmosfair to fund these carbon reduction projects.

For example, if an airline emits 1,000 metric tons of CO₂ per year, it might buy 1,000 metric tons of offsets from a company planting trees in the Amazon. In theory, the net impact on the atmosphere is zero.

But as we’ll see, this ain't reality, folks.

How Carbon is Actually Offset

Carbon offset projects typically fall into two categories: CO₂ removal and preventing future CO₂ emissions.

Carbon removal projects focus on absorbing or capturing existing CO₂ from the air. Direct Air Capture (DAC) pulls CO₂ from the air and stores it underground. Then there's soil carbon sequestration, which uses sustainable agriculture techniques to store carbon in soil. In reforestation and afforestation, trees are planted to absorb CO₂ through photosynthesis. Similarly, ocean-based sequestration enhances natural ocean processes to store carbon. Finally, there are all the other carbon capture and storage (CCS) techniques I wrote about in November.

Carbon reduction by preventing future emissions (author chuckles) focuses on preventing new CO₂ emissions from entering the atmosphere. Examples include wind, solar, and hydroelectric projects that replace fossil fuels and energy efficiency improvements like more efficient appliances, industrial processes, and transportation. It even includes methane capture, preventing methane emissions from landfills and livestock operations. Then there are programs that distribute cleaner cookstoves to replace inefficient wood-burning stoves in underdeveloped communities.

Each approach has challenges with accuracy, additionally, and permanence. And some have problems of pure logic that you don't even need a PhD to identify.

Problems with Offsetting

On the surface, carbon offsetting sounds nice, but there are so many problems with the concept that make it pointless or even harmful.

Offsetting is often used as greenwashing. Companies use offsets as a way to appear sustainable to the public while continuing to pollute. They often don't know and don't care very much about what is really done with the money as long as they can make a pithy statement on their website about how they offset their emissions and care about the planet. It's nothing more than a small piece of the marketing budget on their financial statements.

Those companies and individuals who truly care about what happens when they buy offsets face other challenges. Many projects overstate how much CO₂ they actually remove. Carbon offset sellers have an incentive to do the least amount of work possible to claim the emissions reductions they sell. Many offsets are difficult to verify and prone to fraud. There's the issue of assuming that just because a seedling is put in the ground, it will remove carbon for hundreds of years. Not all seedlings will survive, and trees take decades to absorb significant CO₂, but emissions happen now.

And that brings us to the two biggest problems:

Impermanence and Dumb Accounting

Any biological form of carbon capture and sequestration isn't permanent. A common method of creating carbon offsets is planting trees. Trees will eventually die and decompose, releasing all their carbon back into the air as CO₂. The same is true for soil and ocean carbon sequestration techniques, but let's stick with the tree example.

If a company sells a certain amount of carbon offsets by planting trees, it assumes those trees will remove a certain number of kilograms of CO₂. When those trees eventually die or are harvested for biomass energy, the CO₂ they captured during their lifetime is released back into the atmosphere. Now the land is treeless and the same company or another one can sell more carbon offsets by planting more trees there. The process of tree growth and death (and CO₂) is cyclical. In effect, carbon offsets were sold, and no net CO₂ was sequestered. But the company that bought the carbon offsets thinks that they have reduced emissions with the offset. Now everyone's carbon accounting is screwed up. CO₂ reductions have been overstated, and this will happen every time offsets are sold by planting trees. In essence, carbon offsets can be sold by planting trees on the same acre of land over and over again, but the land does not keep sequestering carbon.

We should pause to ask, where are these trees being planted, and why aren't trees there now? It's usually because a) trees don't grow there, so they won't survive, or b) humans have deforested the land. If it's the latter, that's a bit like stealing someone's wallet and giving it back to them. If the land is located in geographic conditions suitable for forest growth, there would be a forest there. And if there isn't, due to human activity or wildfire, the forest will eventually grow back if left alone. This is a problem for offsets. Selling offsets for planting trees where the trees would've grown back anyway is misleading. The Climate Brink stated it well in this article.

The Additionality and Counterfactual Problems

One of the biggest problems with carbon offsets is that they include projects that would have happened anyway. This creates something from nothing. If a solar and wind installation project is being planned to displace a natural gas power plant, it's wrong for a company to sell carbon offsets for the reduction in emissions from that project. This is especially true now that solar and wind are cheaper than fossil fuel-based power plants. Renewable energy projects are going to occur anyway, whether they're partially funded by offsets or not.

It's like selling credits to make the sun rise. If something is already happening, you don’t get to take credit for it. But carbon offset markets often rely on this exact trick.

Carbon reduction by preventing future emissions is a baseline manipulation fallacy. Instead of measuring absolute emissions reductions, the offset is credited based on relative reductions against a counterfactual scenario—what might have happened. If a new cookstove emits 50% less CO₂ than an older, dirtier model, the offset claims all that reduction as a climate benefit. But the new stove still emits CO₂. The company selling the offset pretends the reduction is the removal of CO₂, but really, emissions are still occurring, just less than in some worse hypothetical situation. This is like getting credit for safe driving because you slowed down to 90 mph in a 55 mph zone.

The core logical flaw is that these offsets confuse relative reduction with absolute reduction. True carbon neutrality requires zero emissions or actual carbon removal. Instead, many offsets take credit for a "less bad" scenario. This improper counterfactual gets us into some carbon-accounting hot water.

If you plug one of three holes in a sinking boat, you don’t get to say you saved the boat. It’s still taking on water, just slightly slower.

This also assumes that no technological progress will occur without offsets. Is it reasonable to assume that more efficient cookstoves and cheaper, lower-carbon electricity sources would never be created on their own? Additionally, numerous studies have shown that improved cookstoves don't actually increase the amount of wood burned. One reason is that they cause people to cook more, burning more wood—classic Jevon's Paradox.

Renewable energy projects emit much less than coal or gas power plants, but they still involve CO₂ emissions from construction, transportation, and maintenance. Efficient cookstoves emit less CO₂ than older inefficient ones per a given amount of heat used but still produce CO₂ and air pollution. LED lightbulbs use less electricity than incandescent ones but still use electricity. Using the false equivalence of relative and absolute emissions to claim a net reduction of CO₂ is a baseline fallacy. If we let that crooked accounting slide, every company and individual can be "net zero" by buying offsets, but still, huge quantities of new carbon dioxide emissions will continue.

It kinda makes sense to use current carbon emissions from specific processes (cookstove usable heat per kg CO₂, gas power plant kWh of electricity per kg CO₂, etc) as a baseline for claiming offsets, but only if you don't think about it too much. However, any baseline other than zero that these carbon offset companies choose is arbitrary and meaningless. We might as well claim carbon offsets for driving a 2024 Chevy Malibu instead of a 1959 Cadillac Eldorado that got 9 mpg.

Or claim offsets because we didn't take a flight. Or claim to save a building from destruction because we didn't set it on fire.

The only true offset is one that removes carbon dioxide from the air (Direct Air Capture) and permanently stores it underground in deep geological repositories. But as I've explained in an article on CCS, DAC is very expensive and not the most valuable use of money or energy. It's cheaper to avoid CO₂ emissions in the first place.

Renewable energy and efficient cookstoves are good things but are not worthy of carbon offsets since they don't lead to a net reduction in carbon emissions. If carbon offsets are to mean anything, we must beware of the improper counterfactual and false baseline.

What's the Alternative?

For companies and individuals wanting to reduce their carbon footprint, the best place to start is with the direct emissions you can control. This will vary based on the business and person, but it might include installing rooftop solar panels, switching to a heat pump and EV, replacing old appliances with more efficient ones, flying less, and eating more plants and less meat.

Focusing on carbon offsets ignores all other forms of environmental harm. A tonne of CO₂ emissions might carry with it vastly different amounts of air pollution, habitat destruction, freshwater use, or toxic byproducts—none of which are considered in the offset scheme.

Most human economic activity creates some environmental harm. If you want to make up for some of this harm, instead of throwing money at sketchy carbon offsets, there are projects out there doing some important environmental restoration work. For example, Planet Wild is focusing on rewilding the planet through monthly missions that bring back endangered species, clean up our oceans, and rewild entire forests. They release a video for every mission about what they did and why, so you know where your contribution is going. Supporters can even vote on which projects to spend money on.

As someone who cares about these issues, Planet Wild is how I contribute.

To Conclude

Relying on offsets distracts from real solutions. Instead of reducing emissions, companies just pay to "cancel them out." It sounds better to customers to tout how much money they spent on planting trees rather than insulating their buildings better. Offsets create a license to pollute and carry on business as usual.

Carbon offsets can play a role in mitigating emissions that can't yet be avoided, but they must remove carbon dioxide from the atmosphere and sequester it for thousands of years. Selling offsets that are based on continuing to emit CO₂, just less than some quasi-arbitrary amount, is deceptive. (Bernie Madoffsets?) Perhaps we shouldn't be so quick to buy the expedient but ambiguous offset and instead reduce the emissions we're responsible for.

Note: Wendover Productions made a great video on carbon offsets if you'd like to learn more.

Questions for you:

• Are carbon offsets a good strategy for reducing CO₂ emissions, or just greenwashing?

• What is the most effective thing you can do to reduce emissions?

• How does the efficacy of offsets compare to a cap and trade system or carbon taxes?

Resources:

Greenfield, P. (2023, January 18). Revealed: More than 90% of rainforest carbon offsets by biggest certifier are worthless, analysis shows. The Guardian. Retrieved from https://www.theguardian.com/environment/2023/jan/18/revealed-forest-carbon-offsets-biggest-provider-worthless-verra-aoe

Song, L., & Temple, J. (2021, April 29). The climate solution actually adding millions of tons of CO₂ into the atmosphere. ProPublica. Retrieved from https://www.propublica.org/article/the-climate-solution-actually-adding-millions-of-tons-of-co2-into-the-atmosphere

Hemming, P. (2023, April 26). Can carbon offsets save the environment? The Australia Institute. Retrieved from https://australiainstitute.org.au/report/can-carbon-offsets-save-the-environment/

Greenfield, P. (2023, May 23). CEO of biggest carbon credit certifier to resign after claims offsets worthless. The Guardian. Retrieved from https://www.theguardian.com/environment/2023/may/23/ceo-of-biggest-carbon-credit-certifier-to-resign-after-claims-offsets-worthless

Lee, M. (2021, June 17). Dangerous distractions: Canada's carbon emissions and the pathway to net zero. Canadian Centre for Policy Alternatives. Retrieved from https://policyalternatives.ca/publications/reports/dangerous-distractions

Greenfield, P., & Watts, J. (2023, August 24). Carbon credit speculators could lose billions as offsets deemed worthless. The Guardian. Retrieved from https://www.theguardian.com/environment/2023/aug/24/carbon-credit-speculators-could-lose-billions-as-offsets-deemed-worthless

Goodall, C. (2009). The green guide for business: The ultimate environment handbook for businesses of all sizes. Profile Books.