Does carbon offsetting really neutralize greenhouse gas emissions?

Japan is one of the nations that says it will use carbon offsetting to achieve its greenhouse gas emissions reduction target. But will that approach really help the world achieve its common goal of halting climate change?

What is carbon offsetting?

A carbon offset is a reduction of GHG emissions or an increase in storage of carbon to compensate for emissions that occur elsewhere. A carbon offset credit is a transferrable instrument credited by a government or independent certification organization that represents a reduction in emissions of carbon dioxide or other GHG. The price of carbon credits is determined by those organizations and varies depending on the scheme. The most common pricing schemes are carbon taxes and emissions trading systems.

A carbon tax is the easiest way to reduce carbon emissions from an administrative perspective. If you increase the tax on beef, for example, the price of beef increases. Consequently, fewer people are able to buy the product, or more people will consume it less. Taxing a behavior deters its use, which reduces the emissions that would otherwise have been created. Another example would be a tax on petroleum-powered cars, which are not very environmentally friendly transport.

A criticism of this system is that for the rich with enough money, a price increase due to such a tax won’t change their behavior. This places the burden of GHG reduction solely on the poor. There are similar problems with the emissions trading system.

Under carbon emission trading systems, an upper limit is placed on emissions, and credits are provided to companies or countries that stay within the limit. They can trade those credits to other bodies that are expected to exceed the limit. Although the actual emissions of each participant vary, the overall output is capped. It is designed this way because it is more difficult for some industries to reduce their emissions than it is for others.

How does carbon offsetting actually work?

The main point of offset credit trading is to enable one body to transfer a net climate benefit to another. In other words, it is a tool to shift responsibility for reducing carbon emissions from one to another and not a way to reduce actual GHG emissions. For example, if one airline emits 45,000 tons of CO2 a year but only has half the amount of offset credits it needs, it can buy credits from another company, or companies, to trade credits to compensate for the remaining 22,500 tons.

In a capitalistic world, who wins in this system? Large corporations and rich countries, of course. You might even be unwittingly contributing to them getting away with it.

Does carbon offsetting amount to greenwashing?

Have you ever seen options such as a “CO2 compensation fee” before you purchase a flight or a bus ticket? When you chose these options, you pay a bit extra on top of the actual price for the company to use to offset the carbon emitted by your travel. Greenwashing alert!

There is little transparency around the usage of these fees. They could be used just to buy carbon credits from other companies instead of helping the company actually reduce its GHG emissions. Often the fees are used in renewable energy projects in developing countries. But the impact of those projects is marginal compared to the impact that major companies and rich countries can make by flying less, changing their food systems, quitting fast fashion, or using less energy. Rather than changing our current carbon-heavy systems for the better, it allows society’s decision-makers to band-aid over, and maintain, our current systemic problems.

Japan’s use of emissions offsetting in developing countries

Japan is one of the richest countries in the world and the 5th largest GHG emitter. Last year, Japan announced a plan to cut its emissions by 46% between 2013 and 2030. It came after the Japanese environment ministry announced in 2021 that it aims to make the nation carbon neutral by 2050.

But instead of taking drastic action to reduce GHG emissions at home, Japan has been working diligently on a Joint Crediting Mechanism (JCM), “a system to cooperate with developing countries for reducing greenhouse gas emissions.” The list of countries includes Mongolia, Bangladesh, Ethiopia, Kenya, Maldives, Vietnam, Laos, Indonesia, Costa Rica, Palau, Cambodia, Mexico, Saudi Arabia, Chile, Myanmar, Thailand, and the Philippines.

JCM projects often introduce renewable energy or efficient energy use, such as power generation by waste heat recovery at factories (Indonesia), and the installation of rooftop solar power systems (Thailand). These projects are great for developing countries and for the planet in the long term, but implementing them just does not address the existing problems in the larger picture.

What practical action on emissions can we take?

Carbon offsetting is not perfect. The offset credit trading system, in particular, is questionable in terms of transparency and effectiveness toward the reduction of GHG emissions, though Japan has pledged to improve transparency by introducing certification. Many countries, including Japan, firmly state that they will use carbon offset schemes as a means to achieve their GHG emissions reduction targets.

Since that is not enough practical action, what can we do as individuals? Here are some ideas.

• Do not get tricked by CO2 compensation fees and other schemes that do little more than make you feel better about emitting GHG emissions. Instead, choose transportation, clothing, food, and energy that emit less GHG.
• This is a summary of Japan’s outline for achieving carbon neutrality: It shows, in Japanese, action plans for different communities, so please take the actions it recommends for your residential area.
• Lastly, be critical about your daily choices that affect GHG emissions.