It has been suggested that carbon credit be merged into this article. (Discuss) Proposed since March 2023.
Wind turbines near Aalborg, Denmark. Renewable energy projects are the most common source of carbon offsets.
Wind turbines near Aalborg, Denmark. Renewable energy projects are the most common source of carbon offsets.

A carbon offset is a reduction or removal of emissions of carbon dioxide or other greenhouse gases made in order to compensate for emissions made elsewhere.[1][2][3] Offsets are measured in tonnes of carbon dioxide-equivalent (CO2e). One ton of carbon offset represents the reduction or removal of one ton of carbon dioxide or its equivalent in other greenhouse gases. One of the hidden dangers of climate change policy is unequal prices of carbon in the economy, which can cause economic collateral damage if production flows to regions or industries that have a lower price of carbon—unless carbon can be purchased from that area, which offsets effectively permit, equalizing the price.[4]

Within the voluntary market, demand for carbon offset credits is generated by individuals, companies, organizations, and sub-national governments who purchase carbon offsets to mitigate their greenhouse gas emissions to meet carbon neutral, net-zero or other established emission reduction goals. The voluntary carbon market is facilitated by certification programs which provide standards, guidance, and establish requirements for project developers to follow in order to generate carbon offset credits.

Offsets typically support projects that reduce the emission of greenhouse gases in the short- or long-term. A common project type is renewable energy,[5] such as wind farms, biomass energy, biogas digesters,[6] or hydroelectric dams. Others include energy efficiency projects like efficient cookstoves,[6] the destruction of industrial pollutants or agricultural byproducts, destruction of landfill methane, and forestry projects.[7] Carbon removal offsets include methods based on net-negative products and processes, such as biochar, carbonated building elements and geologically stored carbon.

Offsets may be cheaper or more convenient alternatives to reducing individual or organizational fossil fuel consumption. However, some critics object to carbon offsets, and question the benefits of certain types of offsets.[8] Due diligence is recommended to help businesses in the assessment and identification of "good quality" offsets to ensure offsetting provides the desired additional environmental benefits, and to avoid reputational risk associated with poor quality offsets.[9]


A carbon offset is a reduction or removal of emissions of carbon dioxide or other greenhouse gases made in order to compensate for emissions made elsewhere. A carbon credit or offset credit is a transferrable instrument certified by governments or independent certification bodies to represent an emission reduction of one metric ton of CO2, or an equivalent amount of other GHGs.[10] Carbon offsets and credits, along with carbon taxes and subsidies, are all forms of carbon pricing. Historically, the concepts of offsets and credits have been intertwined. Both offsets and credits can move amongst the various markets they are traded in.[11] Some programs use other terms for these concepts. Voluntary emissions reduction (VER) refers to a carbon offset that is exchanged in the over-the-counter or voluntary market for credits. Certified emissions reduction (CER) credits are created through a regulatory framework such as the Clean Development Mechanism.[12]

Carbon offset and credit terminology is continuing to evolve. At COP27 negotiators agreed to define offsets and credits issued under Article 6 of the Paris Agreement "mitigation contributions", as a means of discouraging carbon neutrality claims by buyers.[13] Certification organizations such as the Gold Standard even have detailed guidance on how emission reduction projects should be described.[14]

Origins and general features

The 1977 US Clean Air Act created one of the first tradable emission offset mechanisms. This allowed a permitted facility to increase its emissions if it paid another company to reduce, by a greater amount, its emissions of the same pollutant at one or more of its facilities.[15] The 1990 amendments to that same law established the Acid Rain Trading Program. This introduced the concept of a cap and trade system, where limits on a pollutant would decrease over time. Within those overall limits, companies could buy and sell offsets created by other companies that invested in emission reduction projects.[16] In 1997 the Kyoto Protocol created the Clean Development Mechanism. This program expanded the concept of trading emission reductions to a global scale, and focused on the major greenhouse gases that cause climate change.[17] These include: carbon dioxide (CO2), methane, nitrous oxide (N2O), perfluorocarbons, hydrofluorocarbons, and sulfur hexafluoride.[18]

Carbon offsets and credits have several common features:

Programs and markets

There is a diverse range of sources of supply, sources of demand, and trading frameworks that drive offset and credit markets.[28] As of 2022, 68 carbon pricing initiatives are in place or are scheduled for implementation globally.[29] While some of these involve carbon taxes, many are emission trading schemes, or other types of carbon credit and offset markets. International programs include the Clean Development Mechanism, Article 6 of the Paris Agreement, and CORSIA. National programs include ETS systems. There are also standards and crediting mechanisms managed by independent, nongovernmental entities, such as Verra and Gold Standard. Demand derives from a range of compliance obligations established under international agreements and national laws, as well as voluntary commitments adopted by companies, governments, and other organizations.[28]

Compliance markets for carbon offsets comprise both international carbon markets developed through the Kyoto Protocol and Paris Agreement, and domestic carbon pricing initiatives that incorporate carbon offset mechanisms. Domestic compliance markets involve companies purchasing credits that are eligible for meeting their allowances under a domestic law, usually an ETS. Eligible credits in these programs may also include those issued under international or independent crediting systems. Voluntary carbon markets usually consist of private entities purchasing carbon credits in order to meet voluntary greenhouse gas reduction commitments.[28] In some cases purchases of credits might be done as a non-covered participant in an ETS, as an alternative to purchasing offsets in a voluntary market.[11]

Currently there are five exchanges trading in carbon allowances: the European Climate Exchange, NASDAQ OMX Commodities Europe, PowerNext, Commodity Exchange Bratislava and the European Energy Exchange. NASDAQ OMX Commodities Europe listed a contract to trade offsets generated by a CDM carbon project called Certified Emission Reductions (CERs). Many companies now engage in emissions abatement, offsetting, and sequestration programs to generate credits that can be sold on one of the exchanges. At least one private electronic market has been established in 2008: CantorCO2e.[30] Carbon credits at Commodity Exchange Bratislava are traded at special platform - Carbon place.[31]

International compliance programs

Kyoto Protocol and Paris Agreement Article 6 mechanisms

The original international compliance carbon markets were created as part of the Kyoto Protocol . That treaty provides for three mechanisms that enable countries or operators in developed countries to acquire offset credits[32] The economic basis for these programs was that the marginal cost of reducing emissions would differ among countries.[33][34] At the time of the original Kyoto targets, studies suggested that the flexibility mechanisms could reduce the overall cost of meeting the targets.[35] The Kyoto Protocol was to expire in 2020, to be superseded by the Paris Agreement. The Paris Agreement determinations regarding the role of carbon offsets are still being determined through international negotiation specifying the "Article 6" language.[36]

Under the Clean Development Mechanism (CDM) a developed country can 'sponsor' a greenhouse gas reduction project in a developing country where the cost of greenhouse gas reduction project activities is usually much lower, but the atmospheric effect is globally equivalent.[37] The developed country is given credits for meeting its emission reduction targets, while the developing country would receive the capital investment and clean technologyor beneficial change in land use. Once approved, these units are termed Certified Emission Reductions, or CERs. Country specific Designated National Authorities approve projects under this program.[38] Under Joint Implementation (JI) a developed country with relatively high costs of domestic greenhouse reduction would set up a project in another developed country. Offset credits under this program are designated as Emission Reduction Units.[39] Nuclear energy projects are not eligible for credits under either of these programs.[40] Under the International Emissions Trading (IET) program, countries can trade in the international carbon credit market to cover their shortfall in Assigned amount units. Countries with surplus units can sell them to countries that are exceeding their emission targets under Annex B of the Kyoto Protocol.[41] Current CDM projects will transfer to new arrangements under the Paris agreement.

Article 6 of The Paris Agreement continues to support offset and credit programs between countries. These are now carried out to help achieve emission reduction targets set out in each country’s NDC. Under Article 6, countries will be able to transfer carbon credits earned from the reduction of GHG emissions to help other countries meet climate targets. Article 6.2 creates a program for trading GHG emission reductions via bilateral agreements between countries. Article 6.4 is expected to be similar to the Clean Development Mechanism of the Kyoto Protocol. It establishes a centralized program for trading GHG emission reductions between countries under the supervision of the UNFCCC.[42] Emission reduction (ER) credits purchased under this program can bought by countries, companies, or even individuals.[43]

Under Article 6.2 the credits (called internationally transferred mitigation outcomes, or ITMOs) can be transferred from host countries, where the reduction in GHG is achieved. There are a number of ways this can be done.  Credits can go to credit-buying countries towards achieving their NDCs. They can also be transferred and used in market-based schemes such as CORSIA.[44] To guarantee avoid double counting of emission reductions, corresponding adjustments (CAs) are required. If the receiving country uses ITMOs towards its NDC, the host country must ‘un-count' the those reductions from its emissions budget by adding and reporting that higher total in its biennial reporting.[44] In other ways this article provides individual countries a lot of flexibility in how they can creating trading agreements.[45]

Projects under Article 6.4 will be overseen by a “Supervisory Board” which has the responsibility of approving methodologies, setting guidance, and implementing procedures. The preparation work for the this is expected to last until the end of 2023. Emission reduction (ER) credits issued under Article 6.4 will be reduced by 2% in order to ensure that the program as a whole results in an overall Mitigation of Global Emissions (OMGE). An additional 5% reduction of Article 6.4 ERs is dedicated to a fund to finance adaptation. Also, administrative fees for program management are still do be determined.[44] CDM projects are allowed to transition to the Article 6.4 program if they are approved by the country where the project is located, and if the project meets the new rules, with the exception of rules on methodologies. Projects can generally continue to use the same CDM methodologies through 2025. From 2026 on, they must meet all Article 6 requirements. Up to 2.8 billion credits could potentially become eligible for issuance under Article 6.4 if all CDM projects were to transition.[13]

Article 6 does not directly regulate the VCM, and thus in principle carbon credits can be issued and purchased without reference to Article 6. Generally, given the diversity of carbon credits, a multiple tier system could emerge with different types of carbon credits available for investors. Companies will be to able purchase ‘adjusted credits' that eliminate the risk of double counting, possibly with higher perceived value in pursuit of science-based targets and net-zero emissions.  Other ‘non-adjusted' credits could be used to support claims for other environmental or social indicators, or for emission reductions that have a lower perceived value in terms these goals. Uncertainty remains around Article 6’s effects on future voluntary carbon markets what investors could claim by purchasing various types of carbon credits.[44]

Other international programs

The REDD+ program works to create financial value for carbon stored in forests by using market approaches to compensate landowners for not clearing or degrading their forests. REDD+ also promotes co-benefits from reducing deforestation, such as biodiversity. REDD+ largely addresses tropical regions in developing countries. The concept of REDD+ was introduced in its basic form at COP11 in 2005. It has evolved and grown into a broad policy initiative to address deforestation and forest degradation. In 2015, REDD+ was incorporated into Article 5 of the Paris Agreement. REDD+ initiatives typically incentivize and compensate developing countries or subnational entities for reducing their emissions from deforestation and forest degradation. REDD+ consists of several stages, including (1) achieving REDD+ readiness; (2) formalizing an agreement for financing; (3) monitoring, reporting, and verifying results; and (4) receiving results-based payments. Over 50 countries have national REDD+ initiatives, mostly developing countries in or adjacent to the tropics. REDD+ is also being implemented at the subnational level through provincial and district governments and at the local level through private landowners. As of 2020, there were over 400 ongoing REDD+ projects globally, with Brazil and Colombia accounting for the largest amount of REDD+ project land area.[46]

The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is a global, market-based program to reduce emissions from international aviation. Its intent is to allow credits and offsets for emissions that cannot be reduced through the use of technological and operational improvements, or by the use of sustainable aviation fuels.[47] To ensure the environmental integrity of these offsets, the program has developed a list of eligible offsets that can be used. Operating principles for the program are similar to those under existing trading mechanisms and carbon offset certification standards. CORSIA has applied to international aviation since January 2019, when all airlines were required to report their CO2 emissions on an annual basis. International flights have been subject to offsetting obligations under CORSIA since January 2021.[48]

National/subnational compliance programs

Emissions trading systems

Emissions trading has become an important element of regulatory programs to control pollution. Under these programs, emissions are capped but sources have the flexibility to find and apply the lowest-cost methods for reducing pollution.In these programs, a central authority or governmental body allocates or sells a limited number (a "cap") of permits that allow a discharge of a specific quantity of a specific pollutant over a set time period.[49] Polluters are required to hold permits in amount equal to their emissions. Those that want to increase their emissions must buy permits from others willing to sell them.[50] These programs have been applied to greenhouse gases because their warming effects are the same regardless of where they are emitted, the costs of reducing emissions vary widely by source, and the cap ensures that the environmental goal is attained.[51][52]

At the start of 2022 there were 25 operational emissions trading systems around the world, in jurisdictions representing 55% of global GDP. These systems cover 17% of global emissions.[53] EU-ETS is the second largest trading system in the world after the Chinese national carbon trading scheme, covering over 40% of European GHG emissions.[54] California's cap-and-trade program operates along principles, and covers about 85% of statewide GHG emissions.[52]

Voluntary carbon markets and certification programs

In voluntary carbon markets, companies or individuals carbon offsets credits in order to meet self-defined goals for reducing emissions. Credits issued under independent crediting standards, though some entities also purchase them under international or domestic crediting mechanisms. In 2016, about US$191.3 million of carbon offsets were purchased in the voluntary market, representing about 63.4 million metric tons of CO2e.[55] In 2018 and 2019 the voluntary carbon market transacted 98 and 104 million metric tons of CO2e respectively.[56] However, national and subnational programs have been increasing in popularity.[57] Forestry projects currently have the highest level of growth.[58]

Many different groups exist within the voluntary carbon market.[59] Participants include developers, brokers, auditors, and buyers.[60] Emission reduction projects generate carbon offset credits by meeting the accounting standards, project eligibility requirements, and Monitoring, Reporting and Verification (MRV) procedures of the certification program opverseeing the project. These groups include the Verified Carbon Standard, Plan Vivo Foundation, and the Gold Standard. Puro Standard, the first standard for engineered carbon removal, is verified by DNV GL.[61] Gold Standard requires delivery and verification of sustainable development benefits alongside emission reductions. There are also some additional standards for the validation of co-benefits, including the CCBS, issued by Verra and the Social Carbon Standard,[62] issued by the Ecologica Institute.

VERRA was developed in 2005, and is a widely used voluntary carbon standard. As of 2020 there had been over 1500 certified VCS projects covering energy, transport, waste, forestry, and other sectors.[63] In 2021 VERRA issued 300 MtCO2e worth of offset credits for110 projects.[64] Allowable projects under VERRA include energy, transport, waste, and forestry. There are also specific methodologies for REDD+ projects.[65] VERRA is the program of choice for most of the forest credits generated for the voluntarymmarket, and almost all REDD+ projects.[66] Due to criticisms of this program, VERRA will be abandoning its current rules for forestry projects and replacing them with new rules beginning in 2025.[67] General VERRA standards cover the types of projects allowed, allowable project start dates, project boundaries, a 10 year crediting period, as well as a requirement that the project boundaries cover all primary effects, and significant secondary effects.  Verra has additional criteria to avoid double counting, as well as requirements for additionality. Negative impacts on sustainable development in the local community are prohibited.[68] It uses accounting principles that include relevance, completeness, consistency, accuracy, transparency, and conservativeness.[69]

The Gold Standard was developed in 2003 by the World Wide Fund for Nature (WWF) in consultation with an independent Standards Advisory Board. Projects are open to any non-government, community-based organization. Allowable project categories include: renewable energy supply, energy efficiency, afforestation/reforestation, and agriculture. The program's focus includes the promotion of Sustainable Developments Goals. Projects must meet at least three of those goals, in addition to reducing GHG emissions. Projects must also make a net-positive contribution to the economic, environmental and social welfare of the local population. Program monitoring requirements help determine this.[70][71]

Types of offset projects

A variety of projects have been used to generate carbon offsets and credits. These include renewable energy, methane abatement, energy efficiency, reforestation and fuel switching (i.e. to carbon-neutral fuels and carbon-negative fuels).[23][72] The CDM identifies over 200 types of projects suitable for generating carbon offsets and credits.[7]

Offset certification and carbon trading programs vary in the extenet to which they consider these specific projects eligible for offsets or credits.[73] For example, under the European Union Emission Trading System nuclear energy projects, afforestation or reforestation activities (LULUCF), and projects involving destruction of industrial gases (HFC-23 and N2O) are considered ineligible.[74]

Renewable energy

Renewable energy projects include hydroelectric, wind, and photovoltaic solar renewable energy, solar hot water, and biomass power, and heat production projects, among others. Collectively these types of projects help societies move from fossil fuel-based electricity and heat production towards less carbon intensive forms of energy. However, they may not be accepted as offset projects because it is difficult or impossible to determine their additionality. They usually generate revenue, and involve subsidies or other complex financial arrangements. This can make them ineligible under many offset and credit programs.[75]

Methane collection and combustion

Methane is a potent greenhouse gas. It is most often emitted from landfills, livestock, and from coal mining.[72] Methane projects can produce carbon offsets through the capture of methane for energy production. Examples include he combustion or containment of methane generated by farm animals by use of an anaerobic digester,[76] in landfills[77] or from other industrial waste.

Energy efficiency

Chicago Climate Justice activists protesting cap and trade legislation in front of Chicago Climate Exchange building in Chicago Loop
Chicago Climate Justice activists protesting cap and trade legislation in front of Chicago Climate Exchange building in Chicago Loop

While carbon offsets that fund renewable energy projects help lower the carbon intensity of energy supply, energy conservation projects seek to reduce the overall demand for energy. Carbon offsets in this category fund projects of three main types.

Cogeneration plants generate both electricity and heat from the same power source, thus improving upon the energy efficiency of most power plants, which waste the energy generated as heat.[78] Fuel efficiency projects replace a combustion device with one using less fuel per unit of energy provided. This can take the form of both optimized industrial processes[79] (reducing per unit energy costs) and individual action (bicycling to work as opposed to driving).[80] Energy-efficient buildings reduce the amount of energy wasted in buildings through efficient heating, cooling or lighting systems. New buildings can also be constructed using less carbon-intensive input materials.[citation needed]

Destruction of industrial pollutants

Industrial pollutants such as hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs) have a GWP many thousands of times greater than carbon dioxide by volume.[81] Because these pollutants are easily captured and destroyed at their source, they present a large and low-cost source of carbon offsets. As a category, HFCs, PFCs, and N2O reductions represent 71 per cent of offsets issued under the CDM.[7] Since many of these are now banned by an amendment to the Montreal Protocol, they are often no longer eligible for offsets or credits.[82][74]

Land use, land-use change and forestry

Land use, land-use change and forestry (LULUCF) projects focus on natural carbon sinks such as forests and soil. There are a number of different types of LULUCF projects. Forestry related projects focus on avoiding deforestation by protecting existing forests, restoring forests on land that was once forested, and creating forests on land that was previously unforested, typically for longer than a generation.Soil management projects attempt to preserve or increase the amount of carbon sequestered in soil.

Deforestation, particularly in Brazil, Indonesia and parts of Africa, account for about 20 per cent of greenhouse gas emissions.[83] Deforestation can be avoided either by paying directly for forest preservation, or by using offset funds to provide substitutes for forest-based products. REDD (Reducing emissions from deforestation and forest degradation) credits provide carbon offsets for the protection of forests, and provide a possible mechanism to allow funding from developed nations to assist in the protection of native forests in developing nations. Offset schemes using reforestation are available in developing countries, as well as an increasing number of developed countries including the US and the UK.[84][85]

This photo is showing branches overlapping each other with moss on top. These trees that are shown are a part of the carbon offset.
This photo is showing branches overlapping each other with moss on top. These trees that are shown are a part of the carbon offset.

Soil is one of the important aspects of agriculture and can affect the amount of yield in the crops. During the years of agriculture, there has been a decrease in the amount of carbon that the soil is able to hold.[86] Farmers can promote sequestration of carbon in soils through practices such as use of winter cover crops, reducing the intensity and frequency of tillage, and using compost and manure as soil amendments.[87]

Assuring quality

Owing to their indirect nature, many types of offset are difficult to verify. The credibility of the various certification providers is questioned in reports by NGOs and stories in the media. [88] Prices for offsets and credits vary widely, ranging from US$2.75–99.00 per ton of CO2.[89] This is seen as a reflection of the uncertainty associated with these programs and practices.[90] Recently, these issues have caused many companies to become more skeptical of purchasing offsets or credits. [91]

Creating offsets and credits

In order to assess the quality of carbon offsets and credits it is helpful to understand the typical process used to create them. Before any GHG reductions can be certified for use as carbon offsets, they must be shown to meet carbon offset quality criteria. This requires a methodology or protocol that is specific to the type of offset project involved. Most carbon offset programs have a library of approved methodologies covering a range of project types. The next steps involve project development, validation, and registration. An offset project is designed by project developers, financed by investors, validated by an independent verifier, and registered with a carbon offset program. Official “registration” indicates that the project has been approved by the program and is eligible to start generating carbon offset credits after it begins operation.[92]

A commonly used purchasing option is to contract directly with a project developer for delivery of carbon offset credits as they are issued. These contracts provide project developers with a level of certainty about the volume of offset credits they can sell. Buyers are able to lock in a price for offset credits that is typically lower than market prices. However, this may involve some risk for them in terms of the project actually producing offsets.[92]

Once a project is started, it is monitored and periodically verified to determine the quantity of emission reductions it has generated. The length of time between verifications can vary, but is typically one year. A carbon offset program approves verification reports, and then issues the appropriate number of carbon offset credits. These are then deposited into the project developer’s account in a registry system administered by the offset program.[92]

Criteria for assessing quality

Criteria for assessing the quality of offsets and credits usually cover the following areas:

Approaches for increasing integrity

Other groups are advocating for new approaches for insuring the integrity of offsets and credits.The Oxford Offsetting Principles take the position that traditional carbon offsetting schemes are "unlikely to deliver the types of offsetting needed to ultimately reach net zero emissions."[94] These princiiples focus instead on cutting emissions as a first priority. In terms of offsets, they advocate for shifting to carbon removal offset projects that involve long lived storage. The principles also support the development of net zero aligned offsetting[94] The Science Based Targets initiative's net-zero criteria also argue for the importance of moving beyond offsets based on reduced or avoided emissions to offsets based on carbon that has been sequestered from the atmosphere, such as CO2 Removal Certificates.[95]

Some initiatives are focused improving the quality of current carbon offset and credit programs. The Integrity Council for the Voluntary Carbon Market (ICVCM) has published a draft set of principles for determining a high integrity carbon credit, known as the Core Carbon Principles. Final guidelines for this program are expected in late 2023.[96] [97] Similarly, the Voluntary Carbon Markets Integrity Iniitiative, funded in part by the UK government, has developed a code of practice that was published in 2022.[98][99]

Effectiveness and limitations


Offset and credit programs have been identified as way for countries to meet their NDC commitments at a lower cost. [100] They may also accelerate progress in closing the emissions gap identified in annual UNEP reports.[101] These programs also product important co-benefits. Common environmental co-benefits described for these projects include: better air quality, increased biodiversity, and water & soil protection. There are also social benefits, such as community employment opportunities, energy access, and gender equality. Typical economic co-benefits include job creation, education opportunities, and technology transfer. [102] Some certification programs have tools and research products to help quantify these benefits.[103] [104]

Limitations and oversight issues

The ongoing use of offsets and credits faces a variety of criticisms. Some argue that they promote a “business-as-usual” mindset, where companies are able to use carbon offsetting as a way to avoid making larger changes that deal with reducing carbon emissions at its source.[105] [106] These projects are also seen as "Greenwashing". [107] Critics note that offsets and credits are being marketed in a global environment where carbon pricing and existing policies are still inadequate are still inadequate to meet Paris goals. [108] [109] However, there is evidence that companies that invest in offsets and credits tend to make more ambitious emissions cuts compared with companies that do not.[110]

Several certification standards exist, offering variations for measuring emissions baseline, reductions, additionality, and other key criteria. However, no single standard governs the industry, and some offset providers have been criticized on the grounds that carbon reduction claims are exaggerated or misleading.[111][112][113] For example carbon credits issued by the California Air Resources Board were found to use a formula that calculated the amount of timber that could be logged from a given parcel of land, given typical exploitation patterns, rather than the amount that likely would be logged. This led to carbon credits being issued to conservation organizations like Massachusetts Audubon Society in return for not logging forests they presumably had no intention of cutting down.[114][115]

Additionality determinations can be difficult, and may present risks for buyers of offsets or credits.[116] Carbon projects that yield strong financial returns even in the absence of revenue from carbon credits; or that are compelled by regulations; or that represent common practice in an industry; are usually not considered additional. A full determination of additionality requires a careful investigation of proposed carbon offset projects.[117]

Because offsets provide a revenue stream for the reduction of some types of emissions, they can in some cases provide incentives to emit more, so that emitting entities can later get credit for reducing emissions from an artificially high baseline. Actions by regulatory agencies could address these situations. These could include specific standards for verifiability, uniqueness, and transparency.[118]

Concerns with forestry projects

Forestry projects have been increasingly criticized in terms of their integrity as offset or credit programs. In 2023 an investigation and a set of recent studies indicate that carbon emission reductions from projects launched to earn carbon-offset credits have been vastly overstated to the extent that ~90% of rainforest offset credits of the Verified Carbon Standard are called likely to be "phantom credits".[119]

Tree planting projects in particular have been problemmatic. Critics point to a number of conterns. Trees reach maturity over a course of many decades. It is difficult to guarantee the permanence of the forests, which may be susceptible to clearing, burning, or mismanagement.[120][121] Some tree-planting projects introduce fast-growing invasive species that end up damaging native forests and reducing biodiversity.[122] However, some certification standards, such as the Climate Community and Biodiversity Standard require multiple species plantings.[123] Tree planting in high latitude forests may have a net warming effect on the Earth's climate. This is because the absorption of sunlight by tree cover creates a warming effect that balances out their absorption of carbon dioxide.[124]

Tree-planting projects can also cause conflicts with indigenous people who are displaced or otherwise find their use of forest resources curtailed. [125] [126] A 2011 report by Oxfam International describes a case where over 20,000 farmers in Uganda were displaced for a FSC-certified plantation to offset carbon by London-based New Forests Company.[127]

See also


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