Carbon Offsets: Are Carbon Offsets Really Helping the Planet or Just a Feel-Good Scam?

Carbon Offsets: Are Carbon Offsets Really Helping the Planet or Just a Feel-Good Scam?

Kakali Das

You’re shopping online, maybe for new headphone or a couple of books. As you get to the checkout page, a small pop-up appears often, “Make your order carbon neutral for just $2.” There’s a green tree icon, some feel-good graphics about fighting climate change, and it sounds like a good idea. Just $2 to help the planet? Why not?

A few weeks later, while planning a vacation, Google Flights shows you two options for the same flight: one for $400 and another for $420, labeled as carbon neutral.

Again, the promise of helping the environment for a small fee. It plays into your climate anxiety, your desire to do good.

But have you ever wondered where that extra money actually goes? What does it do? The answer reveals a complex and often misleading system.

That $2 or $20 goes toward something called a carbon credit. A carbon credit is like a certificate saying that somewhere in the world, one ton of carbon dioxide has either been stopped from entering the atmosphere or has been removed from it. Companies sell these credits to offset emissions from deliveries, flights, and other activities. On paper, this sounds like a simple way to fight climate change.

But here’s where things start to get tricky. In order for these credits to be valid, companies must prove that the carbon-saving activity wouldn’t have happened without their project. This is called “additionality.”

The most common way to generate carbon credits is through trees, either by planting new ones or by protecting forests from being cut down. Carbon credits became popular after the 1997 Kyoto Protocol, which allowed governments and companies to invest in environmental projects to balance out their emissions.

The idea was revolutionary – let’s reduce emissions by funding projects somewhere else. But these days, many companies use carbon credits not to make actual changes, but to appear green.

In the early days, most projects focused on big industrial changes, like capturing methane from landfills or improving old power plants. But these were expensive and hard to implement. Forest projects, on the other hand, were easier, cheaper, and more appealing to the public.

After the 2015 Paris Agreement, public pressure for climate action increased. Companies started using carbon credits as a shortcut to meet their climate goals.

Major corporations like Microsoft, Google, and Shell promised big climate action, but much of it was based on buying carbon credits rather than reducing actual emissions.

The market exploded. In 2016, the voluntary carbon market was worth around $146 million. By 2022, it had grown to over $2 billion. As demand increased, many new companies and organizations rushed to create and certify carbon credit projects. One of the biggest certifiers is Verra, which is behind a large portion of the forest-based carbon credits.

Here’s how a typical Verra-certified forest project works. A company picks a large area of forest and claims it’s at risk of being cut down. They calculate how much carbon is stored in the trees and how much would be released if the forest were destroyed. Then, they sell carbon credits based on how much carbon they claim they are saving.

But how do they prove that the forest would actually have been destroyed without their project? What if the forest was never truly at risk?

Investigations have shown that companies often make exaggerated claims. For example, one project in the Amazon claimed that deforestation would rise sharply in the area, even though there was no real reason to expect that. There were no new roads, no big population growth, and no change in local farming activity. Still, they projected deforestation rates that were five times higher than the historical average. Verra approved it.

They also used the highest possible estimates for how much carbon was stored in the trees, 400 tons per hectare, even though independent studies showed similar forests usually stored between 250 to 300 tons.

When researchers from the University of Cambridge checked the real-world impact using satellite data and ground surveys, they found little difference between protected and unprotected forests in the region.

This meant the carbon credits they sold were likely based on forests that were never at real risk. These kinds of credits are often called “ghost credits,” and they don’t reflect real emission reductions.

In one investigation, researchers looked at 87 Verra-certified forest projects and found a repeated pattern. The projects overestimated how much forest was at risk and how much carbon they could save. These projects created millions of carbon credits, each worth $15 to $20, but according to a study published in the journal Science, over 90% of those credits didn’t represent real carbon savings.

Let’s say you take a flight from India to New York and pay $20 or ₹2000 approx. to offset your emissions. The airline says your seat generated about two tons of carbon dioxide, and your payment helps cancel that out. But if the credits they use are only 10% effective, you’ve only really offset a small portion of your actual emissions. Most of your $20 went to a credit that doesn’t reflect any real benefit.

The problems don’t stop there. Even if a forest is protected due to carbon credits, logging companies may just cut down a different forest instead. So the overall rate of logging and emissions doesn’t change. That’s called “leakage,” and it’s a big issue in the carbon market.

The system has many built-in flaws. Verra lets project developers choose their own reference areas to estimate deforestation risk. This means they can pick areas with the worst historical deforestation to make their project area look more at risk.

One project in Peru claimed their forest faced destruction based on data from a totally different region with road construction and farming expansion, neither of which existed in their actual project area. When journalists asked for proof, many companies refused to share raw data or said their methods were proprietary and couldn’t be made public.

The system is hard to fix because everyone involved benefits. Project developers make more money if they predict higher deforestation.

Certifiers like Verra collect fees for each approved project, so they have no reason to reject them. Auditors are hired by the same companies they’re supposed to monitor, which creates a conflict of interest. And big corporations get to make impressive climate claims at a low cost.

It’s not just Verra. The same problems show up across the industry. The Nature Conservancy, a well-known environmental group, was caught selling carbon credits for forests that were never at risk. In one case, they sold credits for protecting trees on rocky cliffs where logging wasn’t even physically possible.

In Zimbabwe, a company called South Pole sold millions in credits for protecting a forest they claimed was under threat. When asked for evidence, the story fell apart. The project was suspended, but similar projects by South Pole continued.

Even major technological projects fall into this trap. Shell’s carbon capture project in Australia promised to trap 80% of emissions, but only captured about 30%. Still, they had already sold credits based on the 80% projection. The credits were used to claim full emission offsets, even though the reality was far different.

The playbook is always the same: make scary predictions, use calculations that outsiders can’t verify, get certified by an organization that profits from the process, sell the credits, and dodge tough questions by calling the method secret or too complex to share.

Big brands are deeply involved. Disney, Netflix, Gucci, Microsoft, JetBlue, Coca-Cola, Shell, BP, Walmart, and others have all used forest carbon credits to make claims about being carbon neutral. Some of these companies have since scaled back their credit use after the scandals came out. But many continue quietly, or bundle the credits into larger environmental campaigns to avoid scrutiny.

This isn’t just a problem of wasted money. Every bad carbon credit means real emissions are not being offset. When you buy a “carbon neutral” flight based on fake credits, the emissions still go into the atmosphere. When a company claims their data centres are green thanks to forest credits, but still use fossil fuel energy, the environment still suffers.

Companies are using carbon credits to get permission for new projects, expansions, and operationsbased on promises to offset their impact. It’s like getting permission to dump toxic waste in one river because you claim to clean another. And often, even that clean-up doesn’t really happen.

Fixing the problem is possible, but it needs serious regulation. We need independent, third-party oversight of carbon credits, just like how we have financial auditors and laws to prevent fraud. Some governments are starting to act. The European Union is pushing for strict rules and better verification. California already has a stricter carbon market than the voluntary one, and its credits are more trustworthy.

But until this becomes the global standard, companies will keep choosing cheap carbon credits over real action. It’s much easier, and more profitable, to buy a $2 or ₹175 green label than to make expensive, meaningful changes. So the next time you see that option to make your purchase carbon neutral, ask yourself: is this really helping the planet, or just paying for a feel-good label?

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