Companies Are Dropping Carbon Offsets, But Still Buying the Worst Ones
- Media Manager
- Nov 27, 2023
- 1 min read
Bloomberg
Written By: Natasha White, Akshat Rathi and Demetrios Pogkas
Published: November 27th, 2023
Carbon offsets once looked primed for unstoppable growth. Analysts had forecast that the credits, which claim to wipe out a ton of emissions, would be worth hundreds of billions of dollars in the coming years. But companies are starting to cool on the market as it faces increasingly sharp criticism from scientists and experts.
Purchases by banks, airlines, industrial heavyweights and other businesses fell for the first time last year, according to Bloomberg Green’s analysis of data in three public registries covering more than 260,000 transactions since 2010. The 17% drop in demand for all offsets in 2022 from 2021 doesn’t reflect the impact from more negative events this year, such as the collapse of the world’s second-biggest project and revelations of questionable practices within the unregulated industry.
Within this shifting trajectory for the carbon market and growing questions about its efficacy, buyers haven’t necessarily been switching to higher-quality offsets. Even as transactions declined last year, corporate buyers increased purchases of offsets derived from a particularly controversial source — wind, hydro and solar projects. Most experts have written off these renewable energy credits because power from these sources is already the cheapest option in most parts of the world. That means any extra funding from the sale of carbon offsets won’t move the needle on emissions.Renewable-energy offsets made up about half of all purchases last year, up from 38% in 2021. That increase surprised Lambert Schneider, a carbon markets expert at the German nonprofit Öko-Institut. “It's really well known today that these credits have serious integrity issues,” he said.
