Carbon offsets have surged in popularity in the 20^th century, with some claiming them as being a solution to climate change. But how much credit do we have to give those companies offsetting their carbon emissions? Or are they just using carbon offsets as a form of greenwashing?

Carbon offsetting is considered greenwashing when companies do not prioritize in-house emissions reductions, double-count carbon credits, or invest in non-verified credits. Companies engaging in carbon offsetting can be divided into the three levels of zero, moderate, and severe greenwashing.

Carbon offsets are no doubt a controversial topic. Some believe they improve environmental health, while others assert that they don’t really work since they are not reducing the root cause of carbon emissions. Keep reading to learn what carbon greenwashing is, what the three different levels of greenwashing are, and how all of this applies to carbon offsetting.

Why Could Carbon Offsetting Be Considered Greenwashing

Carbon offsets can 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

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.

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

Cambridge Dictionary

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

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: 

• 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.

If they are not additional and permanent, then those carbon offset programs may be considered greenwashing, which comes in different levels ranging from zero greenwashing, to moderate greenwashing, to severe greenwashing. Below we define what each of these levels means and provide examples of carbon offset greenwashing in today’s market. 

What Are The Different Greenwashing Levels of Carbon Offsetting

Greenwashing can vary from zero, to moderate, to severe depending on the degree of carbon emission reduction and amount of carbon offsets utilized. 

Understanding these levels and the differences between them can lead us to make more informed decisions about carbon offset programs, thereby increasing their effectiveness in reducing carbon emissions. 

Level 1 Carbon Offsetting: Zero Greenwashing

The first level of carbon offsetting is zero greenwashing. At this level, the company or organization is not overstating its environmental contributions. They are reducing emissions first before relying on offsets. And they are offsetting 100%, or even more than 100%, of their carbon emissions. This creates a net-zero carbon emissions profile primarily based on reducing their carbon emissions.

• Carbon emission reductions: Carbon emissions are reduced first before offsets are utilized.
• Additional carbon offsetting: 100% (or more) of carbon emissions are offset. 

Example company #1: GreenGeeks

• GreenGeeks is a web hosting company founded in 2008 that helps users create environmentally-friendly websites. They are 100% based on green energy and also offset 300% of their energy usage. GreenGeeks is recognized by the United States Environmental Protection Agency (US EPA) as a Green Power Partner and works with One Tree Planted to plant one tree for every hosting account that is provisioned on their platform.

Example company #2: Coca-Cola EuroPacific Partners

• They use 100% renewable energy and have reduced greenhouse gas (GHG) emissions across the board by 30.5%. To reach net-zero emissions by the year 2040, they have pledged to first reduce emissions as much as possible before then investing in projects that remove carbon from the atmosphere or in verified carbon offset projects. 

Level 2 Carbon Offsetting: Moderate Greenwashing

The second level of greenwashing is moderate greenwashing. At this level, the company or organization is slightly overstating their environmental contributions to make them seem larger. The company or organization is only slightly, or simply not, reducing carbon emissions and some but not all emissions are offset.

• Carbon emission reductions: Carbon emissions are reduced very slightly, or not at all.
• Additional carbon offsetting: Some, or all, carbon emissions are offset. 

Example company: Lyft

• Lyft is a ridesharing company that is committed to full carbon neutrality. They created a carbon offset program in 2018, offsetting over a million metric tons of carbon that year. They then transitioned to purchasing enough carbon offsets to neutralize the remainder of their emissions, making them a carbon-neutral company. As far as emissions reductions, they purchase clean energy when possible. And when it is not possible, they purchase renewable energy credits (RECs). As of 2020, Lyft has scrapped its carbon offset program, instead opting to transition to all-electric vehicles by the year 2030. They switched to the more direct method of reducing carbon emissions first, but now do not offset any additional carbon emissions. 

Level 3 Carbon Offsetting: Severe Greenwashing

The third level of greenwashing is severe greenwashing. At this level, the company or organization is deceiving the consumer into thinking they are offsetting their emissions when in reality they are not. The company or organization is not reducing any carbon emissions primarily, and only a fraction of total carbon emissions are being offset. 

• Carbon emission reductions: No or virtually no carbon reduction measures are occurring, the entity operates under a “business as usual” approach. 
• Additional carbon offsetting: Only some carbon emissions are offset, but not all.

Example company: Volkswagen  

• In 2015, the EPA found that Volkswagen (VW) had installed a software in diesel engines which could detect when the engine was being tested. When not in test mode, the engines emitted nitrogen oxide pollutants up to 40 times above what is allowed in the US. In short, VW manipulated the system to report better numbers, instead of actually reducing them. At the same time, VW was offsetting carbon emissions in a way that GreenPeace called a “sham” and Forbes called “creative”. VW purchased carbon offsets in projects where permanence was not guaranteed, for example a forest protection project in Indonesia. By focusing first on offsets instead of directly reducing carbon emissions, VW was trying to take the easy way out.

Example company: Verra

• In 2023, a nine-month study conducted by the Guardian, Die Zeit, and SourceMaterial found that of 95 million avoided deforestation carbon credits certified by Verra, only 5.5 million (only 6%) provided real emissions reductions. And of 29 projects, only 8 reduced any emissions at all. Another study focusing on how much deforestation was actually avoided in the first 5 years of 32 avoided deforestation projects found that the projects exaggerated avoided deforestation by an average of 406%. Instead of protecting areas of land the size of Italy, they only protected areas roughly the size of Venice. This gross overestimation of avoided carbon emissions deceives the consumer into thinking they are offsetting large amounts of carbon when they are not.

Which Organizations Were Caught in Carbon Offsetting Controversies

Investing in non-verified credits, not prioritizing in-house emissions reductions, and double-counting carbon credits, are all methods of greenwashing that lead the consumer to believe that a company is doing more to protect the environment than it actually is. The following companies were caught using carbon offsets as greenwashing:

• No permanence: Virgin Atlantic Airways – Oddar Meanchey Offset Program: In 2017, the environmental and social justice organization “Fern” issued a failing grade to Virgin Atlantic Airways’ offset credits for forest conservation in Oddar Meanchey, Cambodia. Virgin stopped purchasing credits after information was uncovered that the forests supposed to be protected by the project were instead being systematically cleared by the Cambodian military. This deforestation negated the carbon offsets. 

• No additionality: The Nature Conservancy: The Nature Conservancy is an environmental nonprofit with a mission of conserving the lands and waters on which all life depends. They own or have helped develop more than 20 projects on forested land in the United States that generate credits so big corporations (e.g. Walt Disney, JPMorgan) can claim their own carbon emission reductions. The problem is that the trees that the Nature Conservancy protects are not in danger of destruction. Carbon projects that take credit for activities already occurring are meaningless and undermine the market’s credibility. Simply put, there was no additionally.

• No additionality: Disney, Shell, Gucci: In January 2023, a nine-month investigation performed by the Guardian, Die Zeit, and SourceMaterial found rainforest carbon credits certified by Verra through their verified carbon standard (VCS) to be lacking in additionality. Disney, Shell, Gucci, and other large companies sold these credits although they protected rainforests that were not threatened in the first place.

Also, in 2016 a European Union study found that roughly 85% of offset projects they examined would have been implemented even without the purchase of offsets. In other words, there was no additionality! The money invested in these projects had no effect on the projects being implemented, or not. So, how can we actively avoid carbon offset greenwashing?

How Can You Avoid Carbon Offset Greenwashing 

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.

The easiest way to avoid carbon offset greenwashing is to not rely on offsets in the first place. 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. Taking direct measures of emission reductions, such as reducing individual energy use and consumption, is much more effective in mitigating emissions.

Ways to directly decrease your carbon footprint without using offsets include: washing with cold water, replacing incandescent bulbs with fluorescent bulbs, flying less, walking or biking when possible, switching to renewable energy sources, recycling, taking shorter showers, and eating less meat and dairy.

If you are still using carbon offsets, making sure that the project is both additional AND permanent is crucial. 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:

• 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.

• Verified Carbon Standard (VCS): Considered the world’s leading voluntary GHG program, with 2,000+ projects having removed 1.1 billion tons of CO₂ from the atmosphere. However, the organization responsible for the VCS, Verra, has been accused of greenwashing in the form of a lack of additionality and over-exaggerating avoided deforestation areas.

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 offsetting is a controversial method of carbon emission reduction because the projects must be both additional and permanent, and you must invest in verified credits, prioritize in-house emissions reductions first, and only single-count carbon credits. This can prove challenging because the VCM is fragmented and complex, which leads to confusion, inconsistencies, and general distrust of the system. Meeting key criteria and following the carbon offset project standards can help ensure that no greenwashing is taking place. 

Carbon offsets are a good place to start if you want to get into the carbon-emission reduction game, but to be effective in the long term, we must not rely on them solely. Cutting emissions from the source and then offsetting the remainder is the best way to reduce our carbon footprint and provide the highest environmental benefits.

Stay impactful,

Sources

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