Carbon credits are failing to help with climate change — here’s why

💡 This article is featured in The Definitive Reading List: illuminem’s Recommended Sustainability Classics

illuminem summarises for you the essential news of the day. Read the full piece on Nature or enjoy below:

🗞️ Driving the news: A group of leading researchers warns that carbon credits are failing to deliver real climate benefits
• A Comment published in Nature argues that the carbon credit system — central to many net-zero strategies — is “fatally flawed” in its current form
• The authors state that most credits issued to date have not led to real emissions reductions or removals, undermining the credibility of corporate and national climate commitments
• They call for a fundamental rethinking of offset mechanisms, with a pivot toward direct emissions cuts and high-integrity removals

🔭 The context: Carbon credits were originally designed to incentivize low-cost climate mitigation by funding projects that avoid or remove emissions
• However, widespread concerns over additionality, permanence, and double counting have raised doubts about their environmental value
• This comes as the voluntary carbon market faces declining confidence, and as COP30 prepares to shape rules for a new global carbon market under Article 6
• The authors represent a broad international coalition of climate governance and carbon market experts, adding weight to their warning
• Notable authors include: Benedict Probst, head of the Net Zero Lab at the Max Planck Institute for Innovation and Competition; Andrew Macintosh, expert in carbon offsets and environmental law; Gregory Trencher, known for his research on corporate decarbonisation and energy transitions; Shanta Barley, Chief Climate Scientist at Fortescue; Thales A. P. West, expert in environmental economics and climate governance; Danny Cullenward, vice chair of California’s Independent Emissions Market Advisory Committee; Donald Butler, known for his work in biodiversity conservation and landscape management; Johan Rockström, Director of the Potsdam Institute for Climate Impact Research
• The historic first major critique of carbon offsetting by Greenpeace was published exclusively by illuminem ahead of COP28 and sparked one of the biggest rifts among greentech and climate leaders

🌍 Why it matters for the planet: Misuse of carbon credits threatens climate ambition by allowing emitters to delay real action
• When credits are awarded for questionable or unverifiable mitigation, emissions continue unchecked while the illusion of progress persists
• This undermines the integrity of net-zero pathways, especially when used to justify ongoing fossil fuel production or deforestation
• The article argues for a strict redefinition of what qualifies as a legitimate offset, with an emphasis on durable removals and verified climate impact

⏭️ What's next: Policymakers and market actors face growing pressure to overhaul the global carbon credit system
• The authors propose four key reforms: redefining eligible activities, aligning credits with national inventories, introducing robust review mechanisms, and phasing out poor-quality credits
• COP30 negotiators will need to address how Article 6 mechanisms avoid replicating the flaws of the voluntary market
• In the coming year, we may see increased demand for independent verification standards and a shift away from avoided emissions toward true carbon removal

💬 One quote: “The idea that emissions can be offset through projects that claim to avoid releases or to remove carbon dioxide from the atmosphere is fatally flawed.” – Macintosh et al., Nature

📈 One stat: Estimates suggest that most of the 1 billion carbon credits issued so far have not resulted in actual emission reductions

Explore carbon credit purchases, total emissions, and climate targets of thousands of companies on Data Hub™ — the first platform designed to help sustainability providers generate sales leads!

Click for more news covering the latest on carbon and sustainable finance