Are carbon credits effective in reducing emissions?

Walking the carbon borderlands

It begins in the air — not with what we see, but with what we don’t. The haze above a highway. The jet trail vanishing into altitude. The hum of electricity pulsing into a building warmed against the cold. Carbon is everywhere and nowhere. A background presence to our modern lives, measured in parts per million, yet almost always out of sight.

In recent decades, humanity has tried to give shape to this formless threat. And one of the ways we’ve done that is through a strange kind of accounting: carbon credits.

A carbon credit is a permit — one tonne of carbon dioxide, either emitted or avoided. It is, in theory, a trade: a company or person emits here, and pays someone else to reduce emissions somewhere else. A burned litre of fuel in Boston is “balanced” by a tree not cut in Borneo. The atmosphere is one system, after all. Molecules mix, no matter where they are born.

On paper, the concept has symmetry. Climate change is a global problem, and if emissions can be cut more cheaply in one country than another, why not let the market find those reductions? This is the promise: that we can use economic tools to incentivize action, shifting money toward greener infrastructure, cleaner technologies, and intact forests.

And sometimes, it works. The European Union’s Emissions Trading System has contributed to measurable reductions. The REDD+ program, aiming to reduce deforestation, has preserved forests that might otherwise have been felled. Carbon finance has helped fund biogas projects, wind farms, reforestation, and even improved cookstoves in regions where woodsmoke is both daily ritual and silent killer.

But step closer, and the clarity fades. The edge of a carbon market is a blurry place, where ethics, economics, and ecology wrestle in the same breath.

The first problem is additionality. A carbon credit is only valid if the reduction it represents wouldn't have happened without the money from the credit. This is hard to prove. Would that forest in Colombia have been cut down without intervention? Would that solar plant in Kenya not have been built anyway? In many cases, these questions are answered with models and projections — forecasts of what might have happened — which are then turned into financial instruments. It’s a risky business, trading in hypothetical futures.

Then comes double counting. One emission reduction, claimed twice — once by the country that hosts the project, once by the company that pays for it. If both add it to their carbon ledgers, the atmosphere is not cleaner, only the numbers are.

The third issue is more psychological. What do carbon credits do to our sense of responsibility?
Do they offer a tool for transition — or a license to continue, dressed in green?

There is a risk that carbon credits, particularly in voluntary markets, become a salve. A way to feel better without doing better. A flight offset with a few dollars. A product labeled “climate neutral” because someone, somewhere, planted a tree.

This isn’t to say the entire system is hollow. There are well-designed credits, rigorously verified, that channel real money into communities on the frontlines of climate impact. And for some developing regions, carbon finance represents one of the few steady sources of investment in conservation and energy access.

But the truth is: carbon credits are not a climate solution in themselves. They are, at best, a temporary bridge — a supporting beam in a much larger structure. Used carefully, transparently, and in tandem with hard emissions cuts, they can help. Used carelessly, they become smoke and mirrors.

The task ahead is not just to offset, but to transform.
To reduce, to redesign, to reimagine.
And to understand that the atmosphere does not respond to accounting. Only to action.

The market and the myth

To understand the promise and peril of carbon credits, we need to look at the mechanism itself — a system built not from earth or stone, but from trust, regulation, and intent.

Carbon credits operate within two main spheres: compliance markets and voluntary markets.

The compliance markets are governed by law — created by governments or blocs like the European Union, where companies are legally obligated to stay within emissions limits. In these systems, carbon allowances are capped and traded. If one company reduces more than its quota, it can sell its surplus to another. Here, the rules are clearer. Verification is stricter. Accountability, at least in principle, is enforceable.

But the voluntary markets — where companies, institutions, and individuals offset emissions by choice — are a different terrain. More flexible, but also more fragile. Here, motivations vary: corporate social responsibility, customer pressure, moral impulse. A tech firm may fund mangrove restoration. An airline might offset flights by buying credits from a wind farm in India. The market thrives on narrative: the promise that your footprint can be cleaned by funding solutions far away.

Yet it is in these voluntary markets that the risk of illusion is greatest.

Because a credit is not just a unit of carbon — it’s a story. A story about what would have happened otherwise. And stories, we know, can be shaped.

There are tales of credits issued for forests that were never at risk of destruction. Of cookstoves counted that never made it to the village. Of projects abandoned, while the credits still circulate. In 2023, investigations into some of the largest voluntary carbon providers revealed that over 90% of their rainforest offset credits may not have represented real emissions reductions. What happens when a system built on trust loses its credibility?

And yet, the need that gave rise to carbon credits hasn’t gone away. If anything, it’s sharper now. Emissions must fall — drastically and fast. Finance must flow — urgently and justly. But can we still use this tool, knowing its flaws?

Perhaps, but only by changing how we use it.

The most respected voices in climate policy now say: carbon credits must be treated as complements, not substitutes. Offsets should not delay emissions reductions at the source. Companies must first measure and cut what they can — then, and only then, offset what remains. That’s the hierarchy: reduce, then remove, then — if necessary — offset.

Verification is also key. New standards, like the Integrity Council for the Voluntary Carbon Market, are emerging to define what “high-quality” means. Credits must be real, additional, permanent, and verified. They must respect the rights of local communities. They must avoid leakage — when protecting one forest simply pushes the threat to another.

There are signs of progress. Technologies for tracking emissions are improving. Satellite monitoring allows deforestation to be verified more accurately. Independent audits are becoming stricter. And some buyers are demanding more: not just offsets, but climate impact with co-benefits — for biodiversity, water, livelihoods.

Still, the shadows remain. Because beyond economics and policy, this is also a moral terrain.

A carbon credit can feel like permission. Like compensation for harm that continues. Like planting a tree with one hand while cutting with the other. And that discomfort — that unease — is not a flaw in the system. It is a necessary tension. It reminds us that carbon credits do not erase emissions. They do not undo the past. They are, at most, a gesture toward a different future — if they are real, if they are fair, if they are part of something bigger.

As we stand now — somewhere between desperation and invention — we need tools that help us change. But we also need honesty. About what we’re buying. About what we’re avoiding. About what cannot be fixed with money, and what must be fixed with will.

The market is not the myth. But the myth that the market is enough — that is what must be abandoned.

Conscience for sale

Beyond the carbon markets and global schemes, beyond corporate net-zero pledges and national inventories, there is a quieter space where the idea of offsetting becomes personal.

You book a flight — a necessary one, perhaps. A family visit, a job, an escape. At checkout, there’s a checkbox: Would you like to offset your carbon emissions for $7.95? You click it. And for a moment, your conscience is soothed.

This is where the promise of carbon credits meets the ordinary life — and where the questions shift from global systems to private choices. Can individuals, too, meaningfully offset their emissions? Does paying for a reforestation project, or clean energy installation, really make a difference?

In one sense: yes. The money, when channeled into a well-run project, does contribute to real work — trees planted, cookstoves distributed, methane captured. These actions matter. They are visible, measurable, and in many cases, vital to local communities and ecosystems.

But the deeper question is one of motivation and mindset.

Does the ease of offsetting discourage deeper change? Does it become a way to postpone the harder decisions — about how we travel, eat, consume, and live?

Offsetting can become a balm. But if it replaces the harder path of reduction, it begins to work against the very change it was designed to support. It becomes a comfort mechanism within the same high-carbon system it ought to challenge.

To act meaningfully, individuals and organizations alike must shift their focus from neutrality to responsibility. Carbon neutrality is a mathematical goal: zero net emissions. But responsibility is messier — and more honest. It asks: What are my real impacts? What can I change? What am I still complicit in? And how can I support solutions that go beyond carbon — that heal systems, not just balance books?

This shift moves us beyond transactions and toward transformation.

And transformation will not come only from personal virtue or corporate branding. It must be structural, systemic. It must question the assumptions that high emissions are inevitable — or that they can be indefinitely outsourced.

Because carbon offsetting, no matter how well designed, cannot carry the full weight of a transition. It is a bridge — not a destination.

And like all bridges, it must lead somewhere real.

Greenwashed and flammable

If carbon credits have a symbol, it is the forest.

Not because forests are simple — but because they are so often simplified.

A mature forest holds decades, even centuries, of accumulated carbon. Trees pull CO₂ from the air and store it in trunks, roots, leaves, and soil. On a ledger, this process becomes a number. One hectare, so many tonnes of avoided emissions. A living ecosystem reduced to carbon arithmetic.

This is the basis for many offset projects under schemes like REDD+ — programs designed to prevent deforestation and generate credits from “avoided loss.” The idea is straightforward: protect the forest, and you protect the carbon it holds.

And it does work, in places. Some forests have remained standing because money flowed from carbon markets to local protectors. Some logging roads were never built. Some communities gained income without cutting down the trees that surround them. That matters.

But a credit sold today assumes that the carbon stored will remain stored — for decades, even centuries. And that assumption grows shakier every year.

Forests burn. Not just in dry seasons, but in dry systems. The climate that once supported them is shifting beneath their roots. In Brazil, in Indonesia, in British Columbia — trees planted for permanence are now tinder. A single fire, and the promise of “offset” becomes ash.

And the problem isn’t just permanence. It’s also measurement. Verifying how much carbon a forest absorbs — or would have emitted if cut — is complex. It depends on forest type, soil, climate, risk projections. It depends on who does the counting, and what they have to gain.

In some cases, forests have been credited for reductions that were unlikely to begin with. In others, communities have been displaced or sidelined to make way for conservation projects tied to distant carbon markets. These are not just technical failures — they are social ones.

The risk is that we start seeing forests as units of carbon, not living systems. That we value them only for what they offset, not for what they are.

And yet — forests can be part of the solution. Carefully managed, deeply rooted in local governance, forest carbon projects can offer both climate benefits and community development. They can channel resources into regions often overlooked. They can preserve biodiversity, protect watersheds, and provide long-term income.

But only if we stop treating them as a loophole.
Only if we stop pretending that protecting one forest means we’ve earned the right to destroy another.

Forests are not carbon vaults. They are not insurance policies.
They are ecosystems — dynamic, vulnerable, essential.

We cannot keep outsourcing the consequences of our emissions, hoping trees will clean up after us.

We can support forests.
We can pay for their protection.
But we cannot buy forgiveness.

The real work

Carbon credits were meant to help. But too often, they’ve become a distraction.

We cannot keep pretending they’re enough.
Not when emissions keep rising.
Not when the carbon budget is nearly gone.

Offsets don’t erase pollution. They don’t buy time we no longer have.

Used sparingly, with integrity, they can support real work.
Used as cover, they delay it.

The truth is simple: we need deep, immediate cuts.
Not promises. Not math.
Action.

The real work is harder. But it’s also the only way through.