Carbon offsets are often shown as a way to reduce greenhouse gas (GHG) emissions and our carbon footprint, thereby ensuring a sustainable planet for future generations. But as with all things, they are not without limitations. They have surged in popularity in the 20^th century, and some even tout them as being a solution to climate change. So, we had to ask: What are the biggest carbon offsetting limitations?

The biggest carbon offsetting limitation is that they only mitigate the problem of our CO₂ emissions. Not all projects are equally effective, they have to be additional, and carried out until the end of their lifespan. And even then, offsets can only remove a tiny fraction of all our CO₂ emissions.

Keep reading to learn about the 9 major limitations of carbon offsetting and how we can make offsetting more efficient and beneficial in the future. 

The Big Picture of Carbon Offsetting and Its Limitations

Carbon offsets play a crucial role in reducing our carbon footprint, the amount of carbon (CO₂) emissions associated with an individual or an entity. 

“Carbon Offset: a way for a company or person to reduce the level of carbon dioxide for which they are responsible by paying money to a company that works to reduce the total amount produced in the world, for example by planting trees”

Oxford Dictionary

Carbon offsets reduce greenhouse gas (GHG) emissions from coal, oil, and natural gas. Reducing your consumption of these, in turn, reduces your carbon footprint, which has huge impacts on environmental, economic, and public health.

“Carbon footprint: the amount of greenhouse gases and specifically carbon dioxide emitted by something (such as a person’s activities or a product’s manufacture and transport) during a given period”

Merriam Webster

When you hear the words “carbon offset”, think about the term “compensation”. Essentially, carbon offsets are reductions in GHG emissions that are used to compensate for emissions occurring elsewhere. They are measured in tons of carbon dioxide (CO₂) equivalents and are bought and sold through international brokers, online retailers, and trading platforms. 

Because GHGs are found everywhere in our atmosphere, cutting GHGs at any location on earth provides emission reduction benefits. However, while beneficial, carbon offsets are not without their limitations. 

The following 9 major limitations should be taken into account when implementing carbon offset programs. (You can click on their link to directly jump to their section in this article.)

These limitations make the current voluntary carbon market (VCM) fragmented and complex, which leads to confusion, inconsistencies, and general distrust of the system.

These Are the 9 Biggest Carbon Offsetting Limitations

The global carbon offset market was estimated at nearly $10 billion in 2010 and has since grown to represent anywhere between $40 billion and $120 billion. But despite all of its success, carbon offsetting is not without its limitations. The main argument against carbon offsets is that they don’t really work, due to a variety of limitations involving their effectiveness, credibility, and success rates.

Limitation #1: You Don’t Reduce Your Own Carbon Footprint

When you purchase a carbon offset, you are paying someone else to cut their emissions so you don’t have to cut your own emissions.

Carbon Offsetting Limitation #1

To offset our carbon footprint we first must determine what our individual carbon footprint is. The United States Environmental Protection Agency (US EPA) provides a calculator so you can determine your carbon footprint in three areas: home energy, transportation, and waste. Everyone’s location, habits, and personal choices are different, so it is important to first know where you fall on the emissions scale before you begin to reduce it. 

Carbon offsetting aims to reduce the consumption of fossil fuels which, in turn, reduces your carbon footprint. A reduced carbon footprint due to lower GHG emissions can mitigate the effects of climate change, improve public health, boost the economy, and maintain plant and animal diversity. But one of the main limitations of carbon offsetting is that purchasing a carbon offset does not directly reduce your carbon footprint. It only makes others reduce their carbon footprint to compensate for your carbon footprint. 

Because offsetting is an indirect way and not a direct way of reducing emissions, it alone will not be enough to significantly reduce global carbon emissions. Coupled with direct measures of emission reductions, such as reducing individual energy use and consumption, offsetting can be more effective.

Limitation #2: Carbon Offsets Do Not Work at the Core Issue of Reducing CO₂ Emissions

When compared to global annual carbon emissions, offsets represent only a fraction of reductions. To be precise, only about 0.8 – 1 % of the annual CO₂ emissions are offset.

Carbon Offsetting Limitation #2

Every year we pump upwards of 35 billion tons of CO₂ into the atmosphere. Opponents of carbon offsets assert that instead of substituting offsetting carbon emissions, we should instead cut the emissions directly at the source. But have we done this? Have we cut emissions directly at the source? The data says no.

The COVID-19 pandemic triggered the largest decrease in energy-related carbon emissions since World War II, a decrease of 2 billion tons. However, emissions rebounded quickly at the end of 2020, with levels in December ending 60 million tons higher than those in December 2019. This indicates that the earth is still warming at an accelerated rate, and not enough is being done to implement clean energy practices. 

In short, carbon offsetting mitigates the problem, but it doesn’t work at the core issue of reducing overall CO₂ emissions. A more effective way of reducing CO₂ emissions is to cut them at the source.

Limitation #3: Carbon Offsetting Only Reduces CO₂ if the Projects Are Additional and Permanent

If carbon offset projects are not additional and permanent, they can actually make climate change worse rather than reducing emissions.

Carbon Offsetting Limitation #3

To be beneficial, carbon offsets must be additional. This means the reductions would not have occurred without an offset market. If offset programs are not additional, then offsetting rather than directly reducing your emissions can actually worsen the effects of climate change.

The concept of additionality is deceptively difficult to evaluate and is often misunderstood. GHG reduction activities are occurring all the time, whether they are required by law or are simply a profitable action to take. For a project to be additional, the ability to purchase carbon offsets must play a decisive role in whether or not it is implemented. Also, determining additionality requires comparing it to an instance where there is no revenue from the sale of offsets. The only way to determine this is via subjective predictions.

Carbon offset projects also must also be permanent, in the sense that there must be a full guarantee against reversals of carbon emission into the indefinite future. Most projects are permanent by nature, but a classic example is sequestering carbon in trees. Once a tree is planted, it should never be removed to guarantee permanence. Cutting down the tree later to harvest wood, or if a forest fire burns the trees down, negates permanence.

Limitation #4: “Poorer” Countries Are Paid to Offset Carbon While the “Rich” Countries Continue to Emit 

Carbon offsetting maintains a social and economic gap between the world’s rich and poor, allowing the rich to continue emitting carbon.

Carbon Offsetting Limitation #4

The richest 1% of the world’s population emitted more than twice as much CO₂ as the poorer half of the world between 1990-2015. And the richest 10% of the world’s population, approximately 630 million people, were responsible for approximately 52% of all carbon emissions during that time. There are many carbon offset programs that can improve the quality of life of those in poorer countries, but since most of the available land for carbon offset programs is located in poor countries, powerful countries sometimes exploit this land, leaving native peoples to face food scarcity and eviction. While the poor countries face these injustices, the richer countries are given a seemingly “free” pass to continue to emit carbon. In a sense, offsetting provides richer countries with a license to pollute. 

Overall emissions rose 60% from 1990-2015, but the rate of emissions from the richest 1% was nearly three times greater than the rate of emissions from the poorer half. Instead of using carbon offsets to reduce emissions in rich countries where overconsumption is commonplace, we have only worsened the climate crisis and allowed the rich to continue to overconsume carbon.

Limitation #5: Different Projects Have Different Effectiveness Rates

Because carbon offsetting programs have varying levels of effectiveness, it can be difficult to choose a program and to ensure that the program you do choose is actually reducing emissions elsewhere.

Carbon Offsetting Limitation #5

Aviation, renewable energy, energy efficiency, and carbon sequestration are just some areas that provide carbon offset projects. They can range anywhere from a couple of hundred tons of CO₂ per program per year to thousands of tons of CO₂ per program per year. They also have varying levels of effectiveness.

• Renewable Energy: The generation of energy from renewable resources (solar, wind, hydro, geothermal, biomass) rather than from fossil fuels creates a reduction in GHG emissions. They generate more energy than is used in their production, and they produce fewer emissions over their lifetime than fossil fuels produce. However, most of the available land for renewable energy carbon offset programs is located in poor countries. When powerful countries exploit this land, the native peoples are forced to compete for their basic needs, and they can even face food scarcity and eviction. 

• Energy Efficiency: These offset projects are designed to create products or systems that use less energy than conventional systems to perform the same task. The projects are typically implemented in developing countries and provide native people with increased energy security, job creation, improved quality of life, and environmental mitigation. However, If products are replaced too quickly, the amount of CO₂ required to produce the new product would exceed the amount of CO₂ saved with the new product.

• Carbon Sequestration: Defined as the long-term storage of carbon in plants, soils, geologic formations, and the ocean and realized through activities including afforestation, reforestation, improved forestry, improved agricultural practices, and revegetation. Stabilizing carbon in solid and dissolved forms prevents it from accumulating in the atmosphere. For every 1 ton of carbon that is emitted, one ton of carbon is sequestered, resulting in net-zero emissions.

• Aviation: Roughly 40 airlines globally offer voluntary offsetting programs, where passengers pay extra money for a flight to fund projects that will reduce CO₂ emissions elsewhere. 500 pounds of carbon per passenger is emitted for every 1,000 miles flown, so reducing these emissions would have positive impacts on the environment. However, even when you pay to offset your flight, the carbon from that flight is still being emitted into the atmosphere. Also, aviation offsets are perhaps the least used and least known of all carbon offsets. Companies may advertise a specific program, but it may be just for public attention.

The varying levels of effectiveness of carbon offset programs can make it difficult to choose one that actually reduces emissions. In short, the most effective offset programs are renewable energy programs, followed by energy efficiency improvements, carbon sequestration, and aviation offset programs.  

Limitation #6: CO₂ Offsets Are Only Realized at the End of Project Durations 

If a carbon offset program is not carried out until the end, then we cannot reap the program’s benefits.

Carbon Offsetting Limitation #6

One of the most popular carbon offset projects involves planting trees. It is a simple action to take and one of the most well-known ways to protect our environment. However, this is not an effective way to reduce emissions in the long term.

To offset even a fraction of our global CO₂ emissions, we would have to plant AND protect a massive number of trees for decades. A newly planted tree could take upwards of 20 years to capture the amount of CO₂ that a carbon offset program promises. Furthermore, there is always the risk of droughts, wildfires, tree diseases, and deforestation wiping out newly planted trees. 

If we can manage to plant and protect the trees until maturity and beyond, then and only then can the carbon sequestration benefits be realized. In reality, this is often not the case. 

Limitation #7: There Are Not Enough Offsets For All CO₂ Emissions

We emit far more CO₂ than we are able to offset because of carbon sink limitations.

Carbon Offsetting Limitation #7

Globally, we pump over 36 billion tons of CO₂  into the atmosphere every year which causes climate change, air pollution, acid rain, ocean acidification, and the melting of glaciers and polar ice. Offsetting all CO₂ emissions is not only difficult, but it is also impractical because there aren’t enough carbon sinks to offset every ton of CO₂ produced from our collective human activities. 

“Carbon Sink: an area of forest that is large enough to absorb large amounts of carbon dioxide from the earth’s atmosphere and therefore to reduce the effect of global warming”

Cambridge Dictionary

The main carbon sinks are:

• Atmosphere: The concentration of carbon in our atmosphere is currently 412 parts per million (ppm), and rising. These levels are the highest seen in the last 800,000 years. Carbon absorbs and radiates heat, which means Earth’s temperatures are rising. And with that comes rising temperature and sea levels, melting of glaciers, and ocean acidification. 

• Forests: They absorb 2.6 billion tons of CO₂ every year. The main threat to this sink is deforestation, which occurs at roughly 10 million hectares (~ 25 million acres) per year. 

• Soil: They absorb approximately 25% of all carbon emissions, with most of it stored as permafrost. Not only that, but Earth’s soil contains 2,500 gigatons of carbon, more than three and four times the amount stored in our atmosphere and in all living plants/animals, respectively. One of the main threats to this sink is the melting of glacier ice due to global warming, which would instead release massive amounts of carbon into our atmosphere. 

• Oceans: Phytoplankton in our oceans are responsible for absorbing approximately 25% of all carbon emissions, making them one of the world’s largest carbon sinks. But this absorbing ability has come at a cost. Increased absorption of CO₂ causes ocean acidification. Over the past 200 years, our oceans have experienced a 30% increase in acidity, which harms marine life and has a ripple effect on our economy.

Once those sinks fill up, we won’t be able to offset any more carbon. Also, the more carbon we add to these sinks, the faster we degrade them and render them unusable.

And how does the current offering of carbon offsets on the voluntary carbon market compare to our collective CO₂ emissions?

In comparison to our 35 billion tons of CO₂ emissions, carbon offset credits for only ~1 billion tons of CO₂ have been listed for sale on the voluntary market. And even then, the number of sellers exceeds the buyers by about 600-700 million tons. Meaning that only about 300-400 million tons of CO₂ offsets actually get realized. Meaning that only about 0.8 – 1 % of the annual CO₂ emissions are offset and only about 1.6 – 1.75% could be offset if all of these projects got realized.

Limitation #8: Not All Offset Projects Get Realized

When offsets do not get realized they do not offset any carbon. And when this doesn’t happen, we don’t reduce any emissions.

Carbon Offsetting Limitation #8

To date, credits for ~1 billion tons of CO₂ have been listed for sale on the VCM. But the number of sellers exceeds the buyers by about 600-700 million tons. Meaning that only about 300-400 million tons of CO₂ offsets actually get realized. This means that between 600 and 700 million tons of CO₂  are emitted but not offset. 

When credits are listed but realized, we are not mitigating any effects of climate change. In return, the rates of temperature rise, sea-level rise, ice melting, and ocean acidification continue to increase as the earth warms.

Limitation #9: Carbon Offsetting Projects are Often Used as Greenwashing

Voluntary carbon market (VCM) offsets are often unregulated and come from a wide range of sources. Companies may advertise a specific program, but it may be just for public attention instead of to actually reduce emissions.

Carbon Offsetting Limitation #9

Companies accused of greenwashing either invest in non-verified credits, do not prioritize in-house emissions reductions, or double-count carbon credits. Or sometimes, all of the above. All of these activities deceive the consumer into thinking they are offsetting their emissions, when in reality they are not. 

“Greenwashing: behavior or activities that make people believe that a company is doing more to protect the environment than it really is”

Cambridge Dictionary

Carbon offsetting has gone through three distinct development phases in its development over the last thirty years, with the most recent and important being the mainstreaming phase. This phase has seen market growth, corporate awareness, and validation of VCM standards by compliance systems. This has significantly reduced the amount of greenwashing instances, because verified project standards hold companies accountable. 

How Can You Overcome (Some) Carbon Offsetting Limitations

While it isn’t possible to overcome all of the carbon offsetting limitations, there are ways to overcome some of the limitations. And it all starts with our individual actions. 

Many of the limitations of carbon offsetting can be overcome by focusing on reducing your own emissions first. Offsets are best used as a supplement to individual emissions reductions because they are indirect methods of reductions.  

How Can You Make Carbon Offsetting More Effective

If they are both additional and permanent, carbon offsets can help reduce your overall GHG emissions to balance off your personal carbon footprint to fight climate change – at least in the short term. But they can be much more effective if they meet certain key criteria and project standards.  

Here are key criteria to look for in a carbon offset program:

• A clearly defined protocol that determines which types of projects are eligible and how emission reductions will be measured

• Independent third-party verification of compliance with the protocol

• Registration of offsets in an offset registry, which tracks each credit with a unique serial number to ensure it is only used once 

• Transparency in project implementation and reporting 

If used correctly, carbon offsets can provide environmental, economic, and social benefits that go beyond reducing GHG emissions. They have the potential to instigate meaningful environmental change and begin to reverse some of the effects of climate change. 

Carbon offset project standards assure transparency and quality in the creation, quantification, and verification of offset projects. This way you can ensure that the project is actually reducing CO₂ emissions. The following are recognized carbon offset standards:

• Verified Carbon Standard (VCS): Considered the world’s leading voluntary GHG program, with 1700+ projects having removed 630+ million tons of CO₂ from the atmosphere. Examples of projects include hydropower in Turkey, forest conservation in Peru, and landfill gas capture in China.

• Gold Standard: A certification that seeks to maximize every dollar of climate and development funding. It has issued 134 million carbon credits from 1700+ projects based in more than 80 different countries. Examples of projects include solar power in India, efficient cooking and heating in China, and wind power in Indonesia.

• Climate Action Reserve (CAR): The premier carbon offset registry for the North American carbon market having issued over 150 million offset credits since its inception in 2001. Examples of projects include landfill gas capture in South Carolina and forest management in California.

• American Carbon Registry (ACR): The first private voluntary greenhouse gas registry in the world. Examples of projects include ozone-depleting substances in Arkansas and methane capture from mines in Kentucky.

Choosing carbon offset projects from any of the above project standard registries helps ensure that your project is verified and that it actually reduces CO₂ emissions.

Final Thoughts

Carbon offsets were invented to reduce carbon emissions in areas where sustainable alternatives are not yet widely available. Adhering to key criteria and verified project standards help increase their effectiveness, credibility, and success rates. However, there are limitations that lead to confusion, inconsistencies, and distrust of the market system.

Many of these limitations can be overcome by reducing your own carbon emissions before relying on offsetting. Offsets should not be used as a panacea for climate change, instead, they should be viewed as one of the many tools available to combat this crisis. Only using carbon offsets and not cutting emissions from the source will not be enough to significantly reduce emissions.

Stay impactful,

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