Concerned about Carbon Credits: Are They Worth it?

By Stephanie Bramwell

As an intern at Carbon Credit Capital (“CCC”), it is perhaps unsurprising that I believe purchasing carbon credits is an environmentally beneficial and morally sound decision. However, recently I was tasked with researching the criticisms of the carbon credit market. My research led me to a variety of news articles and blogs that posited convincing reasons to skip purchasing carbon credits. Thoroughly confused, I spoke with CCC’s Director of Business Development, Reed Shapiro, and Legal Advisor, Pianpian Wang, about my findings. Here are the four arguments against carbon credits that I found to be the most convincing and the CCC team’s responses to these criticisms.

Carbon Offsets Are a License to Pollute?

Perhaps the most popular argument against the carbon credit market is that purchasing carbon credits allows those who emit greenhouse gases to claim increased levels of sustainability without changing their processes. In theory, an individual or organization could purchase enough carbon credits to offset all of their emissions without reducing their emissions onsite. They would achieve carbon neutrality by paying others to sequester emissions. This perpetuates unsustainable lifestyles and does not reduce the air and water pollution typically associated with the emission of greenhouse gases. It also raises environmental justice concerns. Why should those with the financial ability to buy carbon credits be permitted to pollute while others must restructure their businesses to reduce emissions?

The counterpoint is that, while technically possible, it is unlikely that companies or individuals would purchase carbon credits without working to reduce their emissions. Even if a company should purchase carbon credits and avoid onsite updates, they are still positively impacting the environment by offsetting their emissions. The true strength of carbon credits is that they allow companies and individuals to offset emissions that they cannot avoid producing. For example, the online marketplace Etsy purchases carbon credits to offset the emissions produced by shipping products. Etsy ships products through a variety of companies, most of which do not use electric vehicles powered by renewable energy. Unless Etsy creates their own carbon neutral shipping system, they cannot avoid producing greenhouse gas emissions to ship their products. Purchasing carbon credits allows Etsy to offset the tons of carbon produced from shipping and thus neutralize part of their environmental impact.

Although purchasing carbon credits is environmentally beneficial, I maintain that corporations should be pressured to reduce their emissions onsite. To address the climate crisis, emissions must be reduced and it is morally questionable to outsource all of these reductions. However, Shapiro and Wang’s explanation that companies do not act in a vacuum is comforting. Pressure from governments, industry leaders, and consumers can create an environment where successful businesses operate sustainably by purchasing carbon credits and reducing their emissions.

Carbon Offsets Allow Governments to Avoid Upgrading to Sustainable Systems?

Initially, I found this argument to be incredibly convincing. Unlike individuals and corporations, governments are in a position to make sustainable living mandatory and accessible for all citizens. If governments purchase carbon credits they are inappropriately delegating their responsibility to reduce greenhouse gas emissions.

However, as Shapiro and Wang noted, governments aren’t purchasing the bulk of carbon credits. There are some instances when governments purchase carbon credits, for example Germany has purchased carbon credits to offset the unavoidable air travel of their government employees and in 2009 the U.S. House of Representatives offset the emissions of the U.S. Capitol building using carbon credits. However, as these two examples show, the scope of the emissions offset is limited. It is more common for governments to regulate the carbon credit market than to participate as a consumer. This is due to the fact that, unlike corporations, governments do not operate as independent entities. Scrutiny from citizens and other governments greatly influences the actions taken by these bodies. The role of carbon credits and similar mechanisms has been discussed in the international community and governments have largely chosen not to rely on carbon credits as they reduce their emissions to meet the targets of the Paris Agreement.

Shapiro, Wang, and I were in agreement that governments should not purchase carbon credits. I now agree with Shapiro and Wang that the chance of this threat is slim. While governments are commonly cited as potential consumers of carbon credits, in reality, they primarily act as regulators rather than consumers. As long as governments are transparent about their emissions reductions, pressure from citizens and the international community should limit government purchases of carbon credits.

Not All Carbon Offset Projects Offset Greenhouse Gas Emissions?

Originally I found this argument to be less convincing than those previously explored. While I recognize that some offset projects are scams and, due to improper management, some fail to produce the estimated offsets, these cases appear to be the exception and not the norm. However, I was skeptical that carbon credits validated by a recognized third-party certification program were actually offsetting as many emissions as they claimed. There is a lot of discussion about the validity of carbon credits because the math can be complex. However, the basic principles can be simplified, as Shapiro and Wang explained to me.

To begin, a carbon credit is a type of carbon offset. A carbon credit is equivalent to one ton of carbon. A carbon offset has no determined unit. Comparing a carbon credit and a carbon offset is like comparing a gallon and a jug or, depending on the size of the offset, a gallon and a spoonful.

My next question was, if carbon credits are all equivalent to one ton of carbon emissions, why can they be purchased at different prices? Shapiro and Wang explained that, while the environmental impact of each carbon credit is the same, some projects are more expensive because the cost of the project is higher (it requires more advanced technology, more employees, etc.), fewer carbon credits are produced, or the project provides social benefits that purchasers of carbon credits are willing to pay more to support. I associate higher cost with a higher quality product. This is only true for carbon credits in regards to the social benefits of the project, not the extent of greenhouse gas sequestration.

I am no longer skeptical of the fact that one carbon credit offsets one ton of carbon emissions, however, I remain skeptical of carbon offset programs that provide little information about the work they do. To learn how to avoid carbon offset scams, check out this blog post by Pianpian Wang.

As an Individual, is it Better if I Reduce my Emissions Instead of Buying Carbon Credits?

How do I know when I should purchase carbon credits? My initial reaction to this question was that an individual should do everything in their power to reduce their own emissions prior to purchasing carbon credits. We are all operating with limited resources, there are only so many hours in a day and so much money to spend on sustainable living. If I have to make a choice of how to spend my time and money, I think it is more morally sound to reduce my own emissions than to pay someone else to sequester carbon.

However, after speaking with Shapiro and Wang, I now believe that this is, as Shapiro put it, a “yes, and…” situation. I should reduce my carbon footprint and I should purchase carbon credits, because even those who live as sustainably as they can produce some emissions. While we all have limited resources, we also have the ability to divide these resources to support a multitude of causes. Purchasing carbon credits is a question of both feasibility and morality. Not everyone is in a position to purchase carbon credits. Those who are must decide what they are willing and able to offset through carbon credits and how they will personally reduce their emissions. The answer will be different for everyone, but ultimately individuals should strive to reduce their emissions through a combination of changing habits and purchasing carbon credits to offset the greenhouse gases they cannot avoid emitting.

At Least They Are Doing Something

The most common counterpoint to arguments against carbon credits, made by both CCC and a variety of articles, is that carbon credits offset at least some greenhouse gas emissions. They undeniably have a positive environmental impact. The question I have now is, is this enough? Shapiro and Wang seemed to think that it isn’t. Carbon credits are a tool used to address market inefficiencies, but the goal is for carbon neutrality to become built into the economy as quickly as possible. The era of carbon credits should be as fleeting as that of DVD rentals, quickly replaced with carbon neutral systems that are as efficient and ingrained in society as movie streaming services.

I entered this debate with the notion that carbon credits are a nice idea, but that they aren’t a solution to climate change. After speaking with Shapiro and Wang, I have a greater respect for the quality of carbon credits on the market and I recognize them as a necessary tool to reduce global greenhouse gas emissions during the transition to a carbon-neutral global economy.