When you buy a carbon offset, you're paying someone to reduce emissions so you don't have to. In theory, it's elegant—market forces directing money toward the cheapest emission cuts. In practice, the carbon offset market is riddled with accounting tricks that let companies claim climate progress while the atmosphere sees little change.

Studies consistently find that the majority of offset credits don't represent real emission reductions. A 2023 Guardian investigation found that over 90% of rainforest credits from the world's largest certifier were essentially worthless. This isn't a few bad actors—it's a systemic problem baked into how offset markets work.

For an offset to mean anything, it needs to fund emission reductions that wouldn't have happened otherwise. Economists call this "additionality," and it's surprisingly hard to prove. Imagine a forest owner who was never going to log their trees anyway. If they sell you credits for "protecting" that forest, your money didn't prevent any emissions—it just paid for business as usual.

This isn't hypothetical. Renewable energy projects in China and India sold millions of credits for wind farms and solar installations that were already profitable and would have been built regardless. Companies buying these credits got to claim carbon neutrality, but atmospheric CO2 didn't notice the difference.

The fundamental challenge is that additionality requires proving a counterfactual—what would have happened without the project. Project developers have strong incentives to claim their projects are additional, and verifiers struggle to disprove claims about alternate futures. The system rewards creative storytelling about hypothetical emissions.

Takeaway

An offset only works if it funds something that wouldn't exist otherwise. Without rigorous additionality testing, you're often just paying someone to do what they planned to do anyway.

Forest offsets are particularly popular because trees absorb CO2 as they grow. But here's the catch: that carbon is only stored as long as the forest stands. When those trees burn, rot, or get logged, all that carbon goes right back into the atmosphere. Your offset from 2020 can literally evaporate in a 2025 wildfire.

This isn't theoretical risk—it's happening now. California's offset program has seen multiple forest fires tear through registered carbon projects. The Bootleg Fire alone destroyed offsets representing years of claimed reductions. Meanwhile, the original emissions those offsets were supposed to compensate for? Still up there, still warming the planet.

Some programs maintain "buffer pools"—extra credits held in reserve to cover losses. But these buffers are often based on historical fire rates that climate change is rapidly rendering obsolete. As fires become more frequent and intense, buffer pools designed for last century's climate can't keep up with this century's disasters.

Takeaway

Burning fossil fuels releases carbon for thousands of years. Storing it in trees that might burn next summer isn't a fair trade. Permanence mismatches mean forest credits can promise more than nature can guarantee.

Despite these problems, carbon offsets could work with better rules. The key is shifting liability and tightening verification. If offset sellers remained responsible for failed projects—required to replace worthless credits with valid ones—they'd have strong incentives to ensure quality from the start.

Some newer approaches show promise. Direct air capture facilities physically remove CO2 and store it in geological formations for millennia. No additionality questions—the machines wouldn't run without offset revenue. No permanence concerns—underground rock doesn't catch fire. The catch? It costs $400-600 per ton versus $5-15 for questionable forest credits.

Better verification standards are emerging too. Independent satellite monitoring can track forest cover changes in real time. Registries are starting to require more rigorous baseline studies and ongoing monitoring. The question is whether buyers will pay premium prices for high-quality credits when cheap, dubious ones remain available.

Takeaway

Legitimate offsets need three things: verified additionality, permanent storage, and seller liability for failures. Until these become standard requirements, offset markets will keep producing credits that exist only on paper.

Carbon offsets aren't inherently broken—they're just poorly regulated. The current market rewards cheap credits regardless of whether they represent real reductions. Fixing this requires accepting that legitimate offsets cost more and fake ones should carry consequences.

For now, treat offset claims with healthy skepticism. A company announcing "carbon neutrality" through cheap credits hasn't solved anything—they've just purchased an accounting fiction. Real climate action means cutting emissions first and offsetting only what you genuinely can't eliminate.