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Do Carbon Offset Trading Schemes Work?

Updated: Apr 9, 2020

Emissions trading systems enable countries to buy and trade credits from others that have reduced their GHG emissions. Countries that can’t meet reduction targets can purchase “offset” credits that theoretically correspond to emissions reductions elsewhere.

But the value of these schemes is questionable. (In fact, they have been actively promoted by oil companies!) The emissions markets allow companies to invest in climate offset projects that often have little genuine climate impact. For the airline industry and industrialized nations, offsets can be a cheap alternative to actually reducing fossil fuel use.

The world's biggest carbon offset market, the Kyoto Protocol's clean development mechanism (CDM), is run by the UN and administered by the World Bank, and aims to reduce emissions by rewarding countries that invest in clean technologies. In fact, the program may be increasing greenhouse gas emissions. It has handed out billions of dollars to chemical, coal and oil corporations, often for projects they would have built anyway. The program has even subsidized coal plants that claimed credits for being more efficient than they would have been.

Carbon trading has been called “a multibillion dollar scheme whose basic premise is that polluters can pay someone else to clean up their mess so that they don’t have to.”

A tax on carbon emissions is arguably a fairer and more efficient solution.


Further reading: here, here, here, here, here and here.

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