
Achieving the goals of the Paris climate agreement requires deep, rapid cuts in greenhouse gas emissions. Last year, the rules for international carbon trading were finalised, setting the stage for increased demand for carbon credits. However, the authors warn that carbon offsets – tradable credits from projects claiming to reduce or remove emissions – are failing to provide real, additional, and permanent emission reductions. They argue that offsets should be phased out of from national carbon pricing schemes, as the European Union’s Emission Trading Scheme did in 2020.
Approximately 40 percent of existing carbon pricing schemes permit offset use, with most lacking effective restrictions on quality or quantity. Recent analysis showed that less than 16 percent of more than 2300 offset projects examined achieved promised reductions.
When offsets lack integrity, credit prices reflect the cost of supplying “pretend” rather than real emission reductions, artificially lowering the carbon price. This weakens the incentive for polluters to cut their own emissions and tends to drive out higher quality projects that become unviable at low carbon prices. Around 28 percent of global emissions are covered by carbon pricing, but only 3.2 percent face prices above the USD 60 level research suggests is needed to limit warming to well below 2°C.
How offsets weaken CO₂ pricing systems
The lack of effectiveness of carbon offsets is due to several structural problems, the authors write. Offsets should also be additional, not fund projects that would have occurred anyway, they argue. However, verifying actual emissions reductions is extremely difficult because reductions are compared to hypothetical ‘business-as-usual’ scenarios provided by the offset creditor, leaving room for inflated baselines that create the illusion of reductions. Information asymmetries also mean that only the offset project developers know whether their projects are actually dependent on the income from credits, or would have taken place without them.
Most offsets lack permanence, as they often only guarantee CO₂ storage for a few decades, while greenhouse gases can remain in the atmosphere for hundreds to thousands of years. And false incentives ultimately lead buyers to seek out cheap certificates and authorities to prioritise high availability, rather than paying attention to the ecological integrity of the projects.
Policy recommendations
In addition to phasing out offsets from national carbon markets, the authors also suggest that offsets should be replaced with price caps that tighten over time, and require emitters to pay government when unable to meet obligations, instead of enriching private sellers. And if used at all, carbon credits should be based only on durable removal methods that sequester carbon for hundreds to thousands of years, and reserved for genuinely hard-to-abate sources where carbon prices are Paris-aligned and caps are near zero.
Commentary:
Macintosh A., Trencher, G., Probst, B., Barley, S., Cullenward, D., West, T. A. P., Butler, D. & Rockström, J. (2025): Carbon credits are failing to help with climate change — here’s why. Nature, 646 (8085). [DOI: 10.1038/d41586-025-03313-z]
Link to the Commentary:
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