Carbon offset markets face systemic failure after 25-year review

A comprehensive analysis reveals less than 16 per cent of credits deliver genuine emission reductions, as the $2.1-billion voluntary carbon market plummeted by 60 per cent between 2022-2024

- BY ABDULAZIZ KHATTAK

A QUARTER-century of carbon offsetting has failed to deliver meaningful reductions in global greenhouse gas emissions, according to a comprehensive review of scientific evidence to date.

The systematic analysis, published in the Annual Review of Environment and Resources in 2025, examined over 970 million tonnes of carbon credits.

Representing nearly 20 per cent of all credits issued globally, it concluded that fundamental structural flaws render most offset programmes ineffective at scale.

According to the study coauthors, Joseph Romm of the University of Pennsylvania, Stephen Lezak of the University of Oxford, and Amna Alshamsi of the University of Sussex: “A growing number of studies have found that the most widely used offset programs continue to greatly overestimate their probable climate impact often by a factor of five to ten or more.”

The research synthesises two decades of peer-reviewed literature and found that approximately 812 million of the 972 million tonnes analysed are unlikely to represent genuine emissions reductions.

MARKET COLLAPSE & QUALITY CRISIS

The voluntary carbon market, which reached $2.1 billion in transactions in 2021, contracted to $723 million by 2023, a decline exceeding 60 per cent.

Major corporate buyers including United Airlines, Delta Air Lines, Nestlé, Gucci, and EasyJet have reduced or eliminated offset purchases following mounting evidence of quality failures.

Over 5.2 gigatonnes (Gt) of credits have been issued since carbon offsetting began in 1989, with the Clean Development Mechanism and Joint Implementation programme accounting for 3.3 Gt, equal to 63 per cent of total issuance.