Burn a gallon of gas, protect some trees, and you’re net zero. If only it were that easy. 

In recent years, the apparent simplicity of this transaction has been increasingly called into question. In January 2023, the debate culminated in an investigation by the Source Material organization (in collaboration with The Guardian and Die Zeit). Their story, “The Carbon Con,” ignited a media firestorm. Leaning heavily on research that analyzed over 100 million carbon credits for avoided deforestation, the researchers calculated that 94 per cent of those credits are likely to be worthless. Other scientists—and a multi-billion dollar carbon credit industry—disagree. 

That presents us with a dilemma. Do we double down on offsets, fix the worst mistakes, and accept that some “cons” are worth playing? Or do we put all our decarbonization efforts into the tougher battle of reducing emissions in our daily lives? 

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A Protection Racket?

1.  Planning vs protecting. There are two ways to turn trees into carbon credits: planting new ones, and not cutting down old ones. The carbon benefits of the first are hard to quantify, and the second, called “avoided deforestation,” even harder. Avoided deforestation accounts for about 30% of forest credits sold globally, according to Source Material. But you can only take credit for protecting a forest if it would otherwise be razed for logging, agriculture, or settlement. The United Nations helped set up a framework for assessing such projects in developing countries, which organizations like Verra, who sold the credits in question here, turn into standards and then monetize. The Source Material story used research from Thales West of Vrije Universiteit Amsterdam to examine 29 projects in the Brazilian Amazon and concluded that only 5 had resulted in any carbon reductions. 

2.  A profitable guessing game. Predicting how much forest will be cut down in the future is far from an exact science, as the climate and geopolitics shift. West accuses Verra, the organization that sold the carbon credits, of using models that overstated the risk of deforestation, and thus the carbon saved. “I wanted to know if we could trust their predictions,” he told Source Material. “The evidence from the [statistical research] suggests we cannot.” Nor is West the only critic: Last year, the former head of the Australian government’s Emissions Reduction Assurance Committee, said the country’s growing carbon market was “largely a sham.” Others warn of programs ignoring future wildfire and insect risks that could send their tree carbon up in smoke.

3.  The net zero mirage. The questions over Verra’s credits feed into a larger concern—is off-setting our way to carbon neutrality wishful thinking? Some climate scientists are now calling net zero “a dangerous trap” or even a “lie,” because humanity cannot remove carbon at the scale needed to prevent catastrophic climate change. “We have arrived at the painful realization that the idea of net zero has licensed a recklessly cavalier ‘burn now, pay later’ approach which has seen carbon emissions continue to soar,” writes James Dyke, Associate Professor in Earth System Science at the University of Exeter, and others. Only an immediate and drastic reduction in our reliance on fossil fuels will help, they think. As they say, good luck with that. 

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A Maturing Investment   

1.  The carbon value of forests is sky high—and surprisingly cheap. Planting trees is good, but protecting the rich ecosystems of existing forests is better. Researchers at the Cary Institute of Ecosystem Studies calculated that preventing the loss of one hectare of mature forests will typically avoid emissions of about 100 tons of carbon; while tropical reforestation typically sequesters just 3 metric tons of carbon per hectare each year. Forest protection typically has costs only around half those of reforesting a similar area, and comes with knock-on benefits for biodiversity, resilience, and community use. In the absence of local regulations controlling deforestation, carbon credits are a way to give landowners a financial incentive not to clear forests.

2.  The science is good, and getting better. Verra pushed back against some of the research cited by Source Material, claiming that West’s statistical approach did not account for the real-world conditions of the sites in question. Other recent research has found that avoided deforestation programs have, in fact, reduced deforestation and protected sites, particularly with the help of local communities. The World Economic Forum recently wrote that it “stands behind the use of demonstrably high-quality forest carbon credits as a crucial tool in the urgent fight against climate change.” And Verra and others noted that nature-based offset methodologies were continually being updated to reflect the latest science.

3.  A nudge to the bottom line. The idea of net zero is well worth keeping, thinks Nicholas Aster of South Pole, a sustainability solutions provider. He writes on LinkedIn that when corporations start thinking about carbon credits, they have to calculate their own carbon footprint, often for the first time. Buying credits then creates costs for the organization that it will naturally want to minimize, by reducing emissions. Finally, the credits themselves will fund worthwhile projects, many of which “have myriad benefits beyond just removing CO2, including economic and social justice issues around the world.” Until governments get their act together and set tough emissions laws, such voluntary projects are all we have, and nearly 90% of businesses see the value of carbon credits in helping them to decarbonize. Whether that’s the start of a virtuous cycle or just more wishful thinking remains to be seen. 

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What to Keep An Eye On

1.  The appetite for carbon credits. Trove Research, a data and analysis firm focused on corporate climate action, had previously expected the voluntary carbon market to grow by 40% in 2023. In response to the Source Material story, the company warned: “Be careful what you wish for in criticizing corporate climate action. These capital flows are important and will be needed more than ever going forward.”

2.  The net zero juggernaut. In 2022, a record number of companies, over 1,000 including Sony, DHL, and Delta, made their first commitment to setting a net zero target, says Trove. But the number of companies making such commitments also seems to have peaked last summer. Are companies getting serious about the climate in other ways, or is this the beginning of a green backlash?