The promise of offsets is that companies or individuals can balance out their greenhouse-gas pollution by paying other parties to prevent emissions or remove carbon dioxide from the air. For example, landowners might plant a bunch of trees or agree not to cut them down, offsetting pollution generated elsewhere. At least, that’s the idea.
But a bombshell New Yorker article earlier this month asserted that millions of carbon offsets generated by Kariba, a giant project that earned nearly $100 million for purportedly preventing deforestation in Zimbabwe, didn’t actually prevent deforestation and preserve the carbon in the trees and soil.
On Friday, Bloomberg reported that South Pole, the company that sold the majority of those credits, has severed its contract with the company that developed the site. The news “raises the real possibility that the Kariba project could collapse,” wrote the outlet, which had also highlighted problems with Kariba earlier this year.
That, in turn, could undermine the claims of climate progress that major corporations, like Volkswagen and Nestlé, pinned on the purchase of those credits. It may also mean a lot of companies simply threw away a lot of money.
Researchers and journalists (including me) have been steadily highlighting a litany of problems with a variety of offset projects for years. These projects often harm Indigenous communities and fail to deliver the promised climate benefits. And that’s when they don’t burn down in wildfires, wiping out years of carbon gains in days.
But the sheer weight and consistency of the criticism increasingly seems to be resonating at a pitch that companies can’t ignore. In a late 2022 survey, some 40% of corporate respondents said they were concerned about the “reputational risk” raised by public criticisms of carbon offset projects.
In recent months, corporations including Shell, Nestlé, EasyJet, and Fortescue Metals Group all announced they were backing away from offsets or the claims of carbon neutrality that relied upon them.
In a report last week, the advisory firm Carbon Direct highlighted a sharp decline in demand for offsets across the board. The firm analyzed the Voluntary Registry Offsets Database, maintained by the University of California, Berkeley, which contains data from the four major voluntary offset registries.
