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Every day, people are invited to buy products and services with supposed climate benefits – whether this be “carbon-neutral flights”, “net-zero beef” or “carbon-negative coffee”.
Such claims rely on “carbon offsets”.
Put simply, carbon offsets involve an entity that emits greenhouse gases into the atmosphere paying for another entity to pollute less.
For example, an airline in a developed country that wants to claim it is reducing its emissions can pay for a patch of rainforest to be protected in the Amazon. This – in theory – “cancels out” some of the airline’s pollution.
It is not just businesses that are relying on carbon offsets. Major economies, too, are investing in carbon offsets as a way to meet their international emissions targets – with offsetting becoming a major talking point at UN climate negotiations.
For its supporters, offsetting is a mutually beneficial system that funnels billions of dollars into emissions-cutting projects in developing countries, such as renewable energy projects or clean cooking initiatives.
But offsetting has also faced intense scrutiny from researchers, the media and – increasingly – law courts, with businesses facing accusations of “greenwashing” over their carbon-offsetting claims.
There is mounting evidence that offset projects, from clean-cooking initiatives to forest protection schemes, have been overstating their ability to cut emissions. One yet-to-be published study suggests that just 12% of offsets being sold result in “real emissions reductions”.
Projects have also been linked to Indigenous people being forced from their land and other human rights abuses.
Decades of countries trading carbon offsets has had a negligible impact on emissions and likely even increased them.
In this in-depth Q&A, Carbon Brief explains what offsets are, how they are being used by businesses and nations, and why they can be a problematic climate solution. The article also explores whether a system, which one expert describes as “deeply broken”, could ever be effectively reformed.
Carbon offsetting allows individuals, businesses or governments to compensate for their emissions, by supporting projects that reduce emissions elsewhere.
In theory, after cutting their emissions as much as possible, offsets can pay for low-carbon technologies or forest restoration to “cancel out” emissions they cannot avoid.
This could also provide support for relatively low-cost climate action in developing countries and facilitate greater global ambition.
But, in practice, offsetting often enables these entities to justify “business as usual” – producing the same volume of emissions while making claims of reductions that rely on offsets.
Carbon offsets are tokens representing greenhouse gases “avoided”, “reduced” or “removed” that can be traded between an entity that continues to emit and an entity that reduces its own emissions or removes carbon dioxide (CO2) from the atmosphere.
While it allows the first group to continue to emit, theoretically, the second must reduce its emissions or sequester CO2 by an equivalent amount.
Offsets are usually calculated as a tonne of CO2-equivalent (tCO2e) and are also described as tradable “rights” or certificates.
The terms “carbon offsets” and “carbon credits” are often used interchangeably, but the key difference lies in the marketplace they are traded in and how they are mandated to deliver on emissions reductions.
There are broadly two types of carbon markets on which offsets can be traded. The first is the “compliance” market, which is regulated and involves emissions reductions that are mandated by law, supported by common standards and count towards national or sub-national targets.
Common examples include cap-and-trade emissions trading schemes, such as the EU Emissions Trading System (ETS), where power plants and factories must submit carbon “allowances” to cover their emissions each year, within an overall “cap” for regulated sectors.
Companies can buy and sell allowances from – and to – each other. In some cases they can also buy approved offsets from external emission-cutting projects to stay within their limits.
Such schemes cover around 18% of global emissions and, according to the Intergovernmental Panel on Climate Change (IPCC), they have contributed to emissions cuts in the EU, US and China.
Nevertheless, there is considerable evidence that many of the external offsets that have fed into these schemes have resulted in negligible emissions cuts. (See: How are countries using carbon offsets to meet their climate targets?)
The second type of carbon market is the largely unregulated voluntary carbon market, where offsets are used by corporations, individuals and organisations that are under no legal obligation to make emission cuts. Here, there is far less oversight and even less evidence of real-world emissions reductions.
(Most available credits are eligible for use on the voluntary market, but only a smaller subset can be used for compliance. Initially, UN and government-backed programmes were for compliance markets and NGO-backed programmes were for the voluntary market, but both types of programme now often cater to both markets.)
The table below shows a sample of offsetting registries and programmes on offer. These bodies “issue” offsets – meaning they confirm that a number of tonnes of CO2 has been cut, avoided or removed by a project.
These credits are then bought and “retired” when an entity wishes to count them towards its voluntary goal or binding emissions target. Once retired, they cannot be used again.
Offsets can broadly be sorted into two groups, which can be seen in the flow chart below, based on the work of the Oxford Offsetting Principles – an academic framework that seeks to define “best practice” for offsetting.
The first group covers “emissions reductions”. These offsets are used when an entity attempts to compensate for an increase in emissions in one area by decreasing emissions in another area. This group of offsets spans a few types, depending on whether emissions are avoided or reduced, with or without storage.
“Avoidance” or “avoided emissions” offsets are from projects that represent emissions reductions compared to a hypothetical alternative. One of the main types of avoidance offsets is renewable projects that are built instead of fossil-fuel plants. Another is “clean” cookstove schemes, where the distribution of more efficient cooking equipment is intended to cut reliance on traditional fuels, such as firewood, leading to lower emissions.
(Note that carbon offsets are a minefield of overlapping terminology and definitions. Here, “avoided emissions” offsets, as defined by the Oxford Offsetting Principles, are distinct from “emissions avoidance” credits, which have a distinct meaning within UN climate talks.)
Emission reduction offsets with short-lived storage of the relevant CO2 include credits from avoided deforestation projects, such as under the framework for reducing emissions from deforestation and forest degradation (REDD+). These are projects that aim to avoid emissions by protecting forests that would have otherwise been cleared or degraded.
(REDD+ was developed at the UN in the late 2000s as a way to help developing countries preserve their forests and is part of the Paris Agreement on climate change. Separately, projects labelled as REDD+ – which may not be aligned with UN rules – have emerged as a major part of the voluntary offset market, accounting for around a quarter of total volumes.)
Adding carbon capture and storage (CCS) technology to a fossil-fuel power plant, meanwhile, could generate emission reduction credits with a longer shelf-life.
“Removals” offsets are generated by projects that absorb CO2 from the atmosphere. Today, most removal offsets involve tree-planting projects, which do not guarantee permanent storage. (See: Could carbon-offset projects be put at risk by climate change?)
A new wave of more permanent removal offsets could be generated using machines that suck CO2 out of the air and techniques such as enhanced rock weathering. So far, these offsets are limited to the voluntary market and are still under review for inclusion in a new international “Article 6” carbon market by the UN.
Taxonomy of carbon offsets with five types of offset based on whether carbon is stored, and the nature of that storage. Diagram by Carbon Brief, based on the original by Eli Mitchell-Larson for the Oxford Offsetting Principle.
According to Carbon Brief analysis of data from the Berkeley Carbon Trading Project, just 3% of offsets on the four largest voluntary offset registries involve removing CO2 – all from tree-planting projects.
Many available offsets have been labelled “junk” or “hot air” because they result from carbon-market design flaws and do not represent real emissions reductions.
The ideas and experiments with carbon offsets and trading trace back at least half a century, as outlined in the timeline below.
Over the years, offset projects have been dogged by allegations of land conflicts, human rights abuses, hampering conservation and furthering coal use and pollution.
They have been decried as a “false solution” by activists. Negotiations over new carbon markets under Article 6 of the Paris Agreement have seen a sustained outcry for not delivering mitigation at scale, threatening Indigenous rights and “carbon colonialism”.
Meanwhile, companies claiming carbon neutrality using voluntary offsets have been increasingly called out and restrained from making “greenwashing” claims. (See: Why is there a risk of greenwashing with carbon offsets?)
The central problem of carbon offsetting is summarised by Robert Mendelsohn, a forest policy and economics professor at Yale School of the Environment. Reflecting on the achievements of carbon offsets, he tells Carbon Brief:
“They have not changed behaviour and so they have not led to any reduction of carbon in the atmosphere…They have achieved zero mitigation.”
Yet with carbon offsets now firmly established, there are still many who view them as an effective way to bolster corporate climate action, encourage governments to pledge more ambitious emissions cuts and channel climate finance where it is most needed.
“I think we can solve the problems that we currently have in the carbon-market space,” Bogolo Kenewendo, a member of the steering committee for the Africa Carbon Markets Initiative, tells Carbon Brief, emphasising the need for “high quality and high integrity credits”.
Since its formation in 1988, the UN’s climate science authority, the Intergovernmental Panel on Climate Change (IPCC), has published six sets of “assessment reports”. These documents summarise the latest scientific evidence about human-caused climate change and are considered the most authoritative reports on the subject.
Prof Joeri Rogelj – director of research at the Grantham Institute – Climate Change and the Environment and professor in climate science and policy at the Centre for Environmental Policy at Imperial College London – has been involved in writing several of these reports.
He tells Carbon Brief that the phrase “carbon offsets” is “not part of the jargon that the [scientific] literature uses”, so it is not widely used in IPCC reports either.
Most carbon-offset projects around today involve “emissions reductions”, whereby an entity can compensate for their pollution by paying for emissions to not happen somewhere else.
This is most commonly achieved by entities supporting, say, the creation of new renewable energy projects in the place of fossil-fuel schemes, for projects that supply clean cookstoves in the global south or for projects that protect ecosystems in order to avoid more deforestation. (More on this in: What are ‘carbon offsets’?)
While IPCC reports do not say much on carbon offsets, they do discuss the role that these kinds of techniques could play in helping the world meet its climate goals.
For example, the latest IPCC report on how to tackle climate change says that all scenarios for limiting global warming to either 1.5C or 2C involve “greatly reduced” fossil fuel use and a transition to low-carbon sources of energy, such as renewables.
It also says that changes to land-use, such as stopping deforestation, “can deliver large-scale greenhouse gas emissions reductions” – although it adds that this “cannot fully compensate for delayed action in other sectors”.
The report also notes that all scenarios for keeping global warming at 1.5C or 2C require “widespread” access to clean cooking.
A much smaller proportion of carbon offsets around today work by aiming to remove CO2 from the atmosphere to compensate for an entity’s emissions elsewhere.
This is commonly achieved by planting trees, which remove CO2 from the atmosphere as they grow, or by restoring damaged ecosystems, which are natural carbon stores.
Other, more technologically advanced types of CO2 removal are being tested and developed by a handful of companies around the world.
These include growing plants, burning them to generate energy and then capturing the resulting CO2 emissions before they reach the atmosphere – a technique called bioenergy with carbon capture and storage (BECCS).
Another proposed technique would be to use giant fans to suck CO2 straight from the atmosphere before burying it underground or under the sea – a technology called direct air capture and storage (DACCS).
However, neither one of these technologies exist at scale at present – and, therefore, do not yet play a large role in carbon offsetting.
The latest IPCC report on how to tackle climate change concludes that CO2 removal techniques are now “unavoidable” if the world is to limit global warming to 1.5C or 2C.
And Carbon Brief analysis finds that CO2 removal is used to some extent in nearly all scenarios that limit warming to below 2C.
While there is clear scientific evidence that techniques to cut emissions and remove CO2 from the atmosphere will be needed to meet global climate goals, there is not yet a clear understanding of whether finance provided via carbon offsets could – or should – help with implementation.
The latest IPCC report on how to tackle climate change does not discuss in detail the extent to which carbon-offset finance provided by countries could help with implementation, report lead author Dr Annette Cowie, principal climate scientist at the University of New England in Australia, tells Carbon Brief.
One reason for this is that the report was written when countries were still debating the rules for how carbon markets should work under the Paris Agreement, Cowie says. (For more, see: How are countries using carbon offsets to meet their climate targets?)
In addition, the report did not have a “a big focus” on how businesses and organisations use carbon offsets in the voluntary carbon market because the IPCC tends not to focus on the “company level”, she says. (For more, see: How are businesses and organisations using carbon offsets?)
Nevertheless, the report does say that “we will need the private sector to contribute to funding the climate challenge” and refers to carbon markets as a “potentially effective mechanism to achieve this”, she adds.
Nearly every country in the world has set out plans under the Paris Agreement to cut its emissions. Most major economies also have net-zero targets.
Nations have also agreed on a succession of carbon-offset programmes, overseen by the UN. These systems could, in theory, help identify the cheapest emission cuts and enable those countries struggling with their climate goals to pay for reductions elsewhere.
This could help governments achieve their targets and encourage them to set more ambitious ones. It could also deliver money to developing countries, where much of the low-hanging fruit is located – but financial support is needed to take advantage of it.
Yet, despite being in operation for around two decades, so far these mechanisms have not driven a tangible reduction in countries’ emissions.
Instead, energy companies and factories in large, emerging economies have made money selling cheap, but often worthless, offsets to developed countries. As a result, these programmes have increased global emissions.
The earliest major offset schemes were established with the Kyoto Protocol – the first binding international agreement to cut emissions – in 1997.
By far the largest was the Clean Development Mechanism (CDM). This is a compliance mechanism that has allowed developed countries to meet their binding Kyoto emissions targets by buying credits largely generated by low-carbon energy projects in developing countries.
Souparna Lahiri, climate policy advisor with the Global Forest Coalition and a critic of carbon markets, tells Carbon Brief the CDM gave “leeway” to developed countries:
“[They said] let’s spend money where you can reduce [emissions] at a much cheaper cost. So we don’t spend much, but in return for investing…we get a credit that we can balance out with our own emissions.”
The CDM was also meant to channel much-needed climate finance to developing nations, which were not obliged to cut their own emissions under the Kyoto Protocol.
Carbon Brief analysis of UNFCCC data shows China, India, South Korea and Brazil account for 81% of the CDM credits that have been issued, with China alone issuing more than half, as the chart below shows. Barring Egypt and South Africa, African nations have issued just 1% of the credits on the market.
The CDM was agreed alongside another offsetting strategy, termed “Joint Implementation”,
The EU, New Zealand and Switzerland allowed their power plants and factories to purchase Kyoto credits to meet their emissions trading system (ETS) (As of 2020, CDM credits were no longer eligible for use under the EU ETS.)
According to one study, the Kyoto markets helped nine developed countries, including Japan, Spain and Switzerland, meet their initial targets.
Despite this apparent success, many have concluded that the CDM has, ultimately, hindered rather than helped global climate action.
This is because most of the low-carbon projects it supported would likely have happened without finance from developed countries, either because they were already profitable or required by law.
A 2016 EU-commissioned study concluded that 85% of CDM projects, particularly wind power and hydropower plants, were likely to have overestimated their emissions reductions and supported no “additional” low-carbon capacity in developing countries. According to the IPCC’s AR6 report:
“There are numerous findings that the CDM, especially at first, failed to lead to additional emissions cuts in host countries, meaning that the overall effect of CDM projects was to raise global emissions.”
One study found the CDM may have increased emissions by 6bn tonnes of CO2 (GtCO2).
Reports began to emerge in 2012 that the CDM market had “collapsed” amid a “carbon panic”. This was largely the result of a lack of demand from the EU ETS.
From 2012, the EU decided to limit the credits it would accept under the scheme – for example, excluding those generated by industrial gas cuts in factories. Such CDM projects had been accused of incentivising the additional production of greenhouse gases in order to claim credits for destroying them.
The EU also stopped accepting new credits unless they came from least developed countries. At the same time, other developed countries failed to set more ambitious Kyoto targets, meaning there was little demand from outside the EU.
(Despite pushing hard for the inclusion of carbon offsetting, the US ended up not participating in the Kyoto Protocol at all, removing a key potential market for credits.)
The credit price slumped from a record high of $27.50 per tonne of CO2 in 2008 to $0.55 per tonne in 2012. As the chart below shows, the number of new projects being registered to participate in the CDM fell dramatically and has never recovered (although projects continue to issue credits to this day).
With the Paris Agreement, countries agreed to establish new carbon markets that would ultimately replace the troubled Kyoto system. They are collectively known as Article 6 markets, referring to the section of the treaty laying out how countries could “pursue voluntary cooperation” to reach their climate targets.
The carbon-trading components include Article 6.2, which enables countries to directly trade credits dubbed Internationally Transferred Mitigation Outcomes (ITMOs) with each other, and Article 6.4, which creates a new, UN-backed carbon market to effectively replace the CDM.
Unlike the CDM, any country – developed or developing – can buy and sell credits using Article 6 mechanisms to meet their climate goals under the Paris Agreement.
Critically, the new carbon market established under Article 6.4 – but not Article 6.2 – includes a specific goal to “deliver an overall mitigation in global emissions”, achieved by automatically cancelling 2% of any credits that are traded in this system.
This should mean that offsetting under this system is no longer a zero-sum game. No one will be allowed to use those 2% of credits to claim an emissions reduction, ensuring a real-world drop rather than simply moving emissions cuts from one place to another.
Nations have also agreed to avoid “double-counting” Article 6 credits, meaning that if an offset is sold by one country to another, they cannot both count its emissions cuts towards their climate targets. (See: Why is there a ‘double-counting’ risk with carbon offsets?)
Negotiations over the technical details of these new markets have been lengthy and complex.
Some details are still being hashed out by an Article 6.4 supervisory body and the trade in credits under this system is not expected to start until 2024 at the earliest, once the final rules have been established.
Among the issues at stake in the body’s various meetings are methodologies for calculating how many credits are issued and whether to include carbon-removal projects.
Some initial agreements to exchange ITMOs under Article 6.2 have already been made between a handful of nations, including Switzerland with Peru and Ghana.
(See Carbon Brief’s in-depth explainer on the background and technical elements of Article 6 carbon markets, plus the overviews of COP25, COP26, COP27 and the most recent UN talks in Bonn, for details of how these markets have been negotiated.)
According to the International Emissions Trading Association (IETA), 156 countries have signalled their intention to use Article 6 markets either as buyers or sellers. It estimates that the markets could trigger billions of dollars in climate investment and reduce the total cost of implementing climate plans by $250bn a year by 2030.
(IETA represents the carbon-trading sector, including fossil-fuel companies, which have broadly supported market-based approaches in UN climate negotiations.)
Pedro Chaves Venzon, international policy advisor at IETA, tells Carbon Brief:“I expect rapid growth of engagement with Article 6 in the coming years…because not all countries have the potential to scale emission reductions and removals to achieve net-zero only through domestic action.”
Yet supply and demand for Article 6 credits is not guaranteed.
Unlike the Kyoto Protocol, the Paris Agreement requires every country to make an emissions-cutting pledge, not just developed countries.
The avoidance of double-counting could, therefore, make it difficult for countries to both sell large numbers of offsets and also meet their emissions goals. Scott Vaughan, senior fellow at the International Institute for Sustainable Development (IISD), tells Carbon Brief.
“It’s really important for sellers to beware, particularly for developing countries, because you don’t want to be in a position where you end up essentially selling your low-hanging fruit… [then having] very few options in terms of your own domestic [goals].”
Moreover, IETA’s assumptions about nations buying and selling credits are based on governments having more ambitious plans to cut emissions than they do today. If climate goals are not ramped up, there will be less pressure to buy emissions offsets from others.
Finally, civil society groups are concerned that Article 6 markets could repeat the same mistakes as the CDM.
Following years of argument, a relatively small number of CDM credits issued during 2013-2020 are eligible for use to meet nations’ 2030 climate pledges under the Paris Agreement.
(Australia had long proposed to use such credits to meet its Paris pledge. In 2020, following years of pressure, it climbed down and agreed to meet its pledge through domestic action.)
In addition, CDM projects will be allowed to continue issuing credits under the new system, if they meet the new Article 6.4 rules. This could lead to billions of what Carbon Market Watch calls “largely dud credits” entering the Paris regime, with one analysis estimating that up to 2.8bn carbon credits could be issued.
Businesses and other organisations are turning to carbon offsets in response to growing pressure to act on climate change, either to meet legal targets or their own, self-assigned emissions goals.
More than half of the world’s largest 100 companies by revenue have said they intend to purchase offsets, according to Carbon Brief analysis of Net Zero Tracker data. Only four have expressly ruled them out – Walmart, Brookfield Asset Management, Roche and Thai oil-and-gas company PTT Exploration & Production.
Among the biggest offset users are large oil-and-gas companies, airlines and car manufacturers.
In theory, “best practice” for businesses using offsets would involve them cutting their emissions as much as possible each year. Then, offsets could be purchased from elsewhere to cover any “residual” emissions that are too difficult or costly to reduce.
Yet there have been many accusations of “greenwashing” as firms buy cheap offsets of questionable quality, often from projects in developing countries, rather than doing their best to cut their own emissions. (See: Why is there a risk of greenwashing with carbon offsets?)
In places such as the EU, California and Quebec, high-emitting businesses, including factories and power plants, can purchase compliance offsets to meet their legal emissions-cutting obligations under regional emissions trading schemes. These schemes cover billions of tonnes of emissions – and some have linkedemissions cuts at participating facilities to the impact of the regulations.
The UN Carbon Offsetting and Reduction Scheme for International Aviation (Corsia) is a unique example where an entire sector will be obliged to purchase carbon credits to offset its emissions growth beyond 2027.
Beyond such legal requirements, businesses have faced growing societal demand for climate action, corporate social responsibility and the uptake of net-zero pledges.
An entire market has sprung up to serve this demand, known as the voluntary offset market. It is largely unregulated and frequently described as a “wild west” full of “junk” credits.
The voluntary market is underpinned by standards and registries such as the Verified Carbon Standard (VCS) – light blue in the chart below – which accounts for nearly two-thirds of the voluntary market and is administered by the NGO Verra.
The chart below, which shows the number of credits issued by different registries each year, demonstrates the growing dominance of these standards (shades of purple) compared to the UN’s Clean Development Mechanism (CDM – green).
Number of offset credits issued, millions, in the four largest voluntary offset registries, American Carbon Registry (ACR), Climate Action Reserve (CAR), Gold Standard and the Verra (VCS), as well as credits issued by those registries and used for compliance under the California Air Resources Board cap-and-trade programme (shades of purple). Credits issued under the UN-backed Clean Development Mechanism (CDM) are shown in green. Source: Berkeley Carbon Trading Project. Chart: Carbon Brief.
It demonstrates how demand has grown beyond companies and countries investing in CDM offsets solely to meet their obligations under emissions trading schemes and the Kyoto Protocol. (For more on the CDM, see: How are countries using carbon offsets to meet their climate targets?)
Unlike UN-backed credits, the organisations issuing these voluntary market offsets are NGOs and private entities. They have their own frameworks for verifying and issuing credits.
(The division between “voluntary” and “compliance” markets is complicated by the fact that businesses can also buy compliance offset market credits – for example, from the CDM – to make voluntary claims, if they wish. At the same time, compliance programmes such as Corsia or California and Quebec’s cap-and-trade scheme
allow participants to purchase an approved subset of voluntary offset credits to meet compliance targets. Credits issued for the latter scheme are indicated by the California Air Resources Board section of the chart above.)
On top of the standards, there is a supporting ecosystem of auditors who check that offset projects are working as they are supposed to, as well as exchanges and retailers who trade in offsets and act as middlemen in transfers. The infographic below outlines the steps involved in the production, certification and sale of offsets, along with problems that can occur along the way.
According to Carbon Brief analysis of data collected from the four largest voluntary offset project registries by the Berkeley Carbon Trading Project, three-quarters of the 1.8bn voluntary offsets issued are from projects in developing countries, as the map below shows.
As with the CDM, large, emerging economies, such as China and India, have generated a lot of these credits, with 16% and 12% of the total, respectively. As have countries with sizable forests, such as Peru and Indonesia.
Nearly all of the remaining credits are from the US, which is the largest issuer. However, roughly 90% of its credits come from primarily US-based registries, such as the American Carbon Registry, which are, in turn, largely purchased by US-based organisations – often to meet legal targets.
Number of offset credits issued on the four largest voluntary offset registries, American Carbon Registry (ACR), Climate Action Reserve (CAR), Gold Standard and Verra (VCS), by country. Source: Berkeley Carbon Trading Project. Map: Carbon Brief.
A report released by Shell and Boston Consulting Group found the voluntary offset market reached a record $2bn in 2021, four times larger than the previous year. It estimated the market would reach $10-40bn in value by 2030 – and many players in the sector have projected “exponential” growth for voluntary offsets in the coming years.
(This is still far smaller than the value of “carbon markets” more broadly. The trading of permits on the EU ETS and other regional emissions trading schemes was valued at $851bn in 2021.)
There is a disconnect between predictions of growth and the recent backlash against the voluntary offset market.
Prices of voluntary carbon offsets have plummeted over the past year. Investors have been hit by the economic downturn, but there are also broader concerns about the integrity of voluntary offsets. Dr Barbara Haya, director of the Berkeley Carbon Trading Project, tells Carbon Brief:
“The market is in a lot of flux right now and there are two factors pulling in opposite directions where you have all of these carbon-neutral and net-zero targets. So there’s growing interest from buyers to buy offsets, but then also a growing realisation that the market is deeply broken and almost all credits are over-credited.”
(For more on why most offsets are over-credited, see: Do carbon-offset projects overestimate their ability to reduce emissions? and Why is there a ‘double-counting’ risk with carbon offsets?)
Such issues have led to the Science Based Targets Initiative, an organisation that sets guidelines for corporate climate policy, stating unambiguously:
“The use of carbon credits must not be counted as emission reductions toward the progress of companies’ near-term or long-term science-based targets.”
At the same time, Haya adds that offsets can help to promote emissions reductions within businesses.
“Many companies would not have taken on carbon-neutrality goals if it weren’t for that option to buy cheap carbon credits,” she says. Analysis by carbon credit-rating company Sylvera found companies that were investing in offsets were simultaneously cutting their actual emissions at twice the rate of companies that were not.
Efforts to improve the market (see: Is there a way for carbon offsets to be improved?) are underway and Pedro Chaves Venzon, from industry group IETA, tells Carbon Brief that the voluntary market could also help develop methodologies and quality standards for use in international compliance markets:
“While they may not be perfect, they can play a key role in the planet’s journey to net-zero as they can help governments to build the infrastructure required for countries to develop compliance systems and engage with Article 6.”
In conclusion, Haya tells Carbon Brief: “I think it’s absolutely essential that we fix quality before growing the market, otherwise you have an even bigger market standing on a house of cards which is going to collapse when there’s scrutiny.”
One major criticism of carbon offsetting schemes is that they can often, for various reasons, overstate their ability to reduce emissions.
This can be intentional or unintentional. (For more on intentional efforts to overstate the benefits of carbon offsets, see: Why is there a risk of greenwashing with carbon offsets?)
Understanding the ways in which carbon-offset projects can overestimate their ability to cut emissions is important.
This is because, by design, carbon offsets do not lead to a net reduction in emissions entering the atmosphere – but rather aim to allow an entity to “cancel out” their pollution by paying for another entity to pollute less. If the entity paid to pollute less has overestimated its ability to do so, it will lead to a net increase in emissions, exacerbating climate change.
Most carbon-offset projects around today involve “emissions reductions”, whereby an entity can compensate for its pollution by paying for emissions to not happen somewhere else.
This is most commonly achieved by entities subsidising, say, the creation of new renewable energy projects in the place of fossil fuel schemes, supporting projects that supply clean cookstoves in the global south or projects that protect ecosystems in order to avoid more deforestation. (More on this in: What are ‘carbon offsets’?)
Each of these approaches come with risks, says Gilles Dufrasne, global carbon markets lead at the independent watchdog Carbon Market Watch. He tells Carbon Brief:
“For all three you have strong scientific evidence on how there is a massive risk of overestimation in terms of the impacts that these projects are having.”
A recent preprint – a study that has not yet completed the peer review process – estimated that just 12% of carbon-offset projects around today “constitute real emissions reductions”.
There are several ways in which overestimates of emissions reductions can occur.
The first comes from the way that projects measure their ability to reduce emissions, says Dufrasne:
“The big problem with these projects is setting the baseline. When you measure the impact of your project, what are you comparing it to? You’re comparing it to what would have happened in the absence of your project. That counterfactual is quite difficult.”
For example, a forest protection project will generate a certain number of carbon credits to sell on to polluters based on how much deforestation the project developers think they have stopped from happening.
Research shows that forest protection schemes often overestimate how much deforestation they have prevented – and, thus, the amount of emissions they have been able to offset.
One study examining 12 forest protection projects in the Brazilian Amazon found that they consistently overestimated how much deforestation they had prevented.
An investigation by the Guardian, the German weekly Die Zeit and SourceMaterial, a non-profit investigative journalism organisation, published earlier this year found that 90% of the rainforest protection schemes approved by Verra, the world’s largest carbon offsets standards agency, had grossly overestimated the amount of emissions they had saved. Verra strongly refuted the allegations.
An analysis by carbon credit ratings agency Calyx Global found that 70% of clean cookstove projects significantly overestimated their ability to reduce emissions.
And a separate investigation by the Guardian published in September found that the majority of carbon-offset projects that have sold the most carbon credits did not deliver on promised emissions reductions.
Another way that overestimates occur comes from assumptions about how long offset projects can keep carbon locked up. This concept is often called “permanency”.
During a transaction, buyers purchase credits – each representing one tonne of CO2 – with the assumption that an equivalent amount of carbon will be offset somewhere else.
However, this transaction does not consider whether the amount of CO2 offset will stay out of the atmosphere permanently.
This is particularly a problem for forest protection schemes, Dufrasne explains:
“The CO2 you’re emitting into the atmosphere when you burn fossil fuels is going to stay there for centuries to millennia, but the carbon stored in forests – we don’t know how long that is going to stay there. So, there is no equivalence between storing carbon in forests and avoiding the combustion of fossil fuels.”
The carbon stored inside forest protection schemes is at risk from myriad factors.
This includes political and economic changes, which may affect deforestation rates, as well as climate change, which is making tree-killing events, such as wildfires and droughts, more likely. (See: Could carbon-offset projects be put at risk by future climate change?)
This “permanency” risk is well illustrated when a fossil-fuel company pays for its emissions to be offset by a forest-protection scheme, says Dufrasne:
“You’re basically shifting the storage from a very stable carbon pool – fossil fuels trapped under the ground – to a very unstable pool, which is carbon in forests. In the short term, you could say it’s the same thing – it’s one tonne of carbon. But in the medium to long term, it’s not the same thing.”
The risk of overestimates worsens still through another concept known as “additionality”.
This term refers to a conundrum carbon-offset financers often face: how can they really be sure that the money they provided via carbon credits was the deciding factor in the project going ahead – and, thus, the resultant emissions reductions?
This is particularly an issue for renewable energy schemes. While these needed subsidies in the past, price reductions mean renewables such as solar and wind are now cheaper than fossil fuels in most countries – meaning there is already a good economic case for funding such projects without carbon credits, Dufrasne explains:
“For many renewable energy projects, it’s quite unlikely that revenues from carbon credits would make any difference to the economic viability of these projects. In other words, they would have happened anyway.”
The additionality risk associated with renewables is so great that many of the largest registries for voluntary carbon offsetting, such as Verra and Gold Standard, do not allow new renewable energy projects on their books.
(However, it remains undecided whether renewable energy projects will still be able to receive offsetting finance from countries under the Paris Agreement.)
A related concept to additionality is “attributability”.
This refers to the worry that, even if a project would not have gone ahead without carbon credits, how can financers be sure that the emissions reductions achieved are attributable to the project itself – and not some other factor related to politics, economics or the environment?
An example of this issue could occur with a forest protection scheme in the Brazilian Amazon, says Dufrasne.
In 2022, left-wing “zero deforestation” advocate Luiz Inácio Lula da Silva swept to power after a four-year term of Jair Bolsonaro, a far-right president who oversaw an acceleration in Amazon deforestation. Dufrasne explains:
“Let’s say we have a carbon-offset project that’s being implemented between Bolsanaro and Lula’s terms. The project might claim to have stopped deforestation and offset lots of carbon. But how much of that is actually down to the project rather than the change in political leadership?”
Another related issue is “leakage”. This refers to the worry that introducing a carbon-offset project in one region could lead to new emissions happening elsewhere. For example, if a forest protection scheme opens across one stretch of the Amazon, deforesters may simply respond by logging another area of the forest that is not under any protection.
A smaller proportion of carbon offsets around today work by aiming to remove CO2 from the atmosphere to compensate for an entity’s emissions elsewhere.
This is commonly achieved by planting trees, which remove CO2 from the atmosphere as they grow, or by restoring damaged ecosystems, which are natural carbon stores.
As with emissions reductions, offsets that remove CO2 from the atmosphere can often come with risks of overestimates occurring.
Prof Ian Bateman is an environmental economist at the University of Exeter and director of NetZeroPlus, a research project that is examining how the UK could remove emissions from the atmosphere through tree-planting and restoring ecosystems.
He tells Carbon Brief that tree-planting is fraught with intricacies and complications that – if not carefully considered and managed – can lead to overestimates of emissions reductions occurring and – in the worst cases – more carbon being added to the atmosphere:
“Very often, we don’t know what the net carbon consequences of what we’re doing actually is.”
An example of tree-planting gone wrong occurs when forests are planted over peatlands, he says.
Peatlands are waterlogged environments with extremely carbon-rich soils. Past tree-planting schemes have drained peatlands in order to plant forests – unintentionally causing vast quantities of carbon once trapped in soggy soils to be released into the atmosphere, Bateman explains:
“You get this problem of ‘global warming forests’. If you’re planting in the wrong area, you can emit more carbon than you store by a long way – I’m not talking a bit, I’m talking multiples of the amount of carbon that a tree can store.”
Does he worry that carbon-offset project developers may not have the capacity to take into account the many risks associated with tree-planting?
“Yeah, absolutely. Globally, we need tools – provided by scientists – that people can use to allow them to understand these risks.”
Another criticism of carbon offsets is they can be fraught with risks of “double-counting”.
“Double-counting” is when two entities use the same emissions reduction towards meeting their climate targets.
There are various ways that double-counting can happen.
One way that double-counting might occur, in theory, is when a country pays for a carbon-offset project in another country. The risk here would be that both countries count the same emissions reductions achieved by the project towards their own climate targets, giving an inflated picture of how both countries are doing on tackling emissions globally.
However, at the COP26 climate summit in Glasgow in 2021, countries agreed to new rules under the Paris Agreement to stop this kind of double-counting from occurring, says Gilles Dufrasne, global carbon markets lead at the independent watchdog Carbon Market Watch.
“If a country buys a carbon credit, then the country where the project is being implemented cannot count that project towards its international climate pledge. So, let’s say the US buys credits in the Brazilian Amazon, the US can use that towards its international climate target – but Brazil cannot.”
Another way that double-counting might occur is when a private company pays for a carbon-offset project in another country. The risk here would be that the country where the carbon-offset project is located counts the emissions cuts towards its climate target, while the company uses the same emissions reductions to make claims about reducing its carbon footprint or achieving net-zero.
Under the Paris Agreement, this kind of double-claiming is currently not completely prevented from happening, Dufrasne explains:
“So, you could have, [hypothetically], Microsoft buying carbon credits in the Brazilian Amazon. Brazil will use those emissions reductions for its international climate target and Microsoft will use it to say they are carbon neutral.
That is where we think there is a double-claiming risk with two entities counting the same emissions reduction.”
In other words, if the company pays for one tonne of carbon to be stored in the Brazilian Amazon – both the company and Brazil can individually claim that they have offset one tonne of carbon.
This is – in theory – not actually a problem for the Paris Agreement. That is because only countries have to report their emissions under the agreement. So, it would only be Brazil that would claim they have offset their emissions under the framework.
However, groups such as Carbon Market Watch argue that this sort of double-claiming is highly misleading for consumers. In addition, it can raise an “additionality” risk, says Dufrasne.
“Additionality” refers to a problem carbon-offset financers frequently face: how can they really be sure that the money they provided via carbon credits was the deciding factor in the project going ahead – and, thus, the resultant emissions reductions? (See more in: Do carbon-offset projects overestimate their ability to reduce emissions?)
Dufrasne explains: “If you have [a company such as] Microsoft counting the same reduction as Brazil, how can Microsoft be sure it’s not just paying for something Brazil was going to do anyway?
In other words, if the private sector provides enough cash through carbon credits to reduce Brazil’s emissions by a sizable amount, Brazil might no longer feel the need to introduce new policies to tackle its emissions itself. Dufrasne continues: “The private sector is sort of substituting what the government was planning to do anyway. It’s not a bad thing in itself to support developing countries, but it’s not the same thing as delivering additional tonnes of CO2 reductions.”
At the COP27 climate summit in Egypt in 2022, negotiators did come up with a new concept to try to reduce the risk of double-counting by companies and countries.
They agreed to establish a new type of carbon credit known as a “mitigation contribution”. This type of credit would allow countries hosting carbon-offsetting projects to count the emissions reductions achieved towards their climate targets, but not the companies responsible for funding the project. Instead, the company would “contribute” to the emissions cuts in the host country, making these credits effectively a form of climate finance.
Another – less talked-about – way that double-counting can occur is when carbon-offset projects overlap.
The risk of overlap is particularly high for forest-protection schemes and clean cookstove initiatives, says Dufrasne. (See: What are carbon offsets?)
Both schemes claim to reduce emissions by stopping deforestation. (Clean cookstove projects aim to reduce deforestation by providing people in the global south with fuel-efficient cookstoves, meaning they no longer have to cut down trees for firewood.)
If a cookstove project and a protected forest initiative are active in the same area, there could be a risk that both projects assume that the drop in deforestation they’ve measured is just down to them alone, Dufrasne explains:
“Currently, there aren’t specific rules to address that.”
An analysis by carbon credit ratings agency Calyx Global found that more than half of energy efficient cookstove projects are co-located in areas where projects claim emission reductions from protecting forests. It said it was not possible to determine the full extent of double-counting between the two types of offsetting projects.
Another possible way for double-counting to occur is through how carbon credits are traded in markets.
At present, carbon-offsets registries must mark when a carbon credit has been “retired” – namely, used by a buyer. (Find out more about how registries work: How are countries using carbon offsets to meet their climate targets?)
However, registries do not always provide information about who used the credit – potentially leaving a loophole for exploitation, says Dufrasne:
“There’s very little transparency about what happens to the credits once they are on the market. In theory, there could be unscrupulous brokers selling credits to multiple clients, saying: ‘I’ve retired the credit for you, you can see it in the registry.’
“I have no proof this ever happens, it’s just a possibility.”
Accusations of “greenwashing” against companies – and even governments – have climbed as the use of carbon offsetting has grown.
Offset purchases have led to firms making misleading claims about “carbon-neutral” airlines, fossil fuels and international sporting events.
Dr Barbara Haya, the director of the Berkeley Carbon Trading Project, tells Carbon Brief:
“We know that offsets are undermining direct action in some cases. We know that offsets are also making us believe the fiction that we can fly guilt-free, that we can buy carbon-neutral gasoline, and that’s never the case.”
According to Prof Gregory Trencher, an energy-policy expert at Kyoto University:
“The fundamental definition of greenwashing refers to a situation when the climate benefits that are claimed by a particular company don’t match the reality. And I think we see a very clear trend with certain companies, looking at their offsetting practices, if we look at the kind of benefits that are claimed by these particular projects.”
A 2023 study that Haya led found “shortcomings” among each of the three major voluntary offset market registries that generate credits by “improved forest management”. According to the authors, all three registries “risk over-crediting” for projects. The paper called for a “higher burden of evidence for quality” of offsets.
So-called “bogus” or “junk" credits are not a new problem. The US Federal Trade Commission (FTC), the country’s consumer-protection agency, was investigating “fraudulent carbon trading” as early as January 2008, National Public Radio reported at the time.
Many companies demonstrate a “clear preference” for purchasing avoidance credits over removal ones, since the avoidance credits are significantly cheaper than removal credits – even though the former are “a little bit misleading”, Trencher says. He tells Carbon Brief:
“If we put ourselves in the position of the consumer, or a stakeholder, we’re assuming that when a corporate activity is conducted [and] that amount of CO2 is released into the atmosphere, we’re assuming that that’s somehow physically removed and compensated for.”
Similarly, companies often purchase cheaper, “aged” offsets – offsets issued for projects that were established years or even decades ago – rather than the more expensive, newer ones.
But if credits are being issued for, say, a project that was built 15 years ago, “the effect of that project on lowering emissions in the world today is extremely questionable”, Trencher says. Offsets should have a “stronger temporal association between the polluting activity and the activity that’s used to mop up these emissions”, he adds. “This window is really, really stretched in many situations.”
Trencher co-authored a 2023 study that examined the net-zero strategies and offsetting behaviours of four major oil companies. It found that none of the companies had plans to transition away from fossil fuels, instead relying on offsets to reach net-zero emissions. The authors concluded:
“These findings challenge the appropriateness of claims about ‘carbon-neutral’ hydrocarbons, showing how net-zero strategies omit the urgent task of curbing the supply of fossil fuels to the global market.”
Pushing back against the notion that carbon offsets give companies a “licence to pollute”, a report from Sylvera, a carbon-credit-rating company, found that purchasing offsets was associated with actual emissions reductions.
Among 102 companies across a range of sectors, those who purchased credits reduced their direct emissions and those related to their energy consumption by a combined average of 6.2% per year over 2013-21, while those that did not reduced their emissions by an average of 3.4% per year. (See: How are businesses and organisations using carbon offsets?)
Nevertheless, increased scrutiny of companies’ net-zero pledges has developed into a trend of litigation against these companies for false or misleading advertising, often on the basis of their carbon offset use.
The years of 2021 and 2022 each saw more than 25 lawsuits filed over misleading “climate-washing” claims, according to the Grantham Institute’s 2023 “Global trends in climate change litigation” report.
And this number is likely an undercount, since the database used in the report does not capture motions filed in administrative or consumer-protection bodies, explains Catherine Higham, a policy fellow at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science. She tells Carbon Brief:
“These are representative of the fact that we have so many industries trying to make these claims about carbon neutrality, relying often on offsetting.”
Unlike lawsuits that have been brought on the basis of human rights or for climate-related damages, claims brought on the basis of greenwashing have typically been resolved relatively quickly – and often in favour of the plaintiffs, Higham says. She tells Carbon Brief:
“We have seen a significant number of successes where courts have said that whatever the advertising campaign is, it is misleading and isn’t particularly well-substantiated.”
Additionally, such lawsuits are being filed against a “really diverse set of players”, Higham says – not just traditionally high-emitting industries such as fossil-fuel companies, automobile manufacturers and airlines, but also banana growers, cleaning product companies and both dairy and non-dairy milk producers.
In March 2022, UN secretary-general António Guterres established the High‑Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities. The group, whose membership comprised a range of experts, including researchers, policymakers and business executives, produced a report on their findings, called “Integrity Matters: Net Zero commitments by Businesses, Financial Institutions, Cities and Regions”.
In the report, the group lays out a range of recommendations for these “non-state actors” to establish effective net-zero plans, including that they “prioritise urgent and deep” emissions reductions, rather than relying primarily on offsets.
At the report’s launch in COP27 in Sharm el-Sheikh, Guterres told the room:
“We must have zero tolerance for net-zero greenwashing…Using bogus ‘net-zero’ pledges to cover up massive fossil fuel expansion is reprehensible. It is rank deception.
“The absence of standards, regulations and rigour in voluntary carbon market credits is deeply concerning. Shadow markets for carbon credits cannot undermine genuine emission reduction efforts, including in the short term. Targets must be reached through real emissions cuts.”
The report provides a strong foundation for plaintiffs to build their lawsuits upon going forward, Higham says, pointing out that it is “just one of quite a lot of efforts” among governments and other groups to establish standards and regulations for the use of offsetting.
Trencher notes that as scrutiny around the use of offsets has increased, messaging from companies has shifted, putting increased focus on the quality of offsets. He adds:
“This correlation between offsetting and greenwashing has been, I think, acknowledged now as a real risk for offsetting companies.”
Another major criticism of carbon-offset projects is that they often come with side effects for local communities, particularly Indigenous peoples.
In the past two years, several high-profile media investigations have alleged that carbon-offset projects selling credits to companies ranging from the oil firms Total and Shell through to Disney, Meta and Netflix have led to serious impacts for local communities, including forcing Indigenous peoples out of their homes or farmland.
There have also been detailed investigations into how carbon offsets issued to countries under the Clean Development Mechanism – the UN’s first attempt to allow carbon trading between nations – have had serious impacts for people and nature.
For example, the Guardian in 2015 reported that a planned dam in Guatemala, which issued carbon credits for developed countries to buy under the CDM, was linked to the killing of six Indigenous peoples, including two children.
REDD+ projects that issue carbon credits from forest protection activities have been particularly damaging for Indigenous peoples.
This is due to some offset projects not complying with Indigenous peoples’ and communities’ rights over their territories, leading to some being forcibly removed from their homes or farmland.
Levi Sucre, a Costa Rican Indigenous leader and coordinator of the Mesoamerican Alliance of Peoples and Forests – which stretches from Mexico through to Panama – explains to Carbon Brief the importance of territory for Indigenous peoples: “Those are ancestral lands. We have lived there for generations. It is important that countries respect the rights of Indigenous people. Otherwise, we would face an imminent dispossession of land, which means livelihoods, cultural uprooting and destruction of the people”.
In a report published by the Rights and Resources Initiative (RRI), Woodwell Climate Research Center and Rainforest Foundation US, it is estimated that the land “held and used” by Indigenous peoples, Afro-descendent peoples and local communities store at least 253bn tonnes of carbon, which is distributed in the regions shown in the map below.
The map shows the carbon stocks that lie in both legally recognized and unrecognized territories owned by Indigenous and local communities that make up the Global Alliance of Territorial Communities. Colours indicate the tonnes of carbon per hectare. The more yellow the regions is, the more carbon it stores. Map: Carbon Brief, adapted from Rights and Resources Initiative, Woodwell Climate Research Center and Rainforest Foundation US report.
Another recent report by the RRI concluded that more than 1375m hectares of the land claimed by Indigenous peoples, Afro-descendent peoples and local communities has not yet been legally recognised.
Without legal recognition of land rights and, eventually, “carbon rights” – defined as the rights to the benefits generated from emissions reduction – communities are at risk of missing out on benefits from offset projects, according to Alain Frechette, director of strategic analysis and global engagement at the RRI. He tells Carbon Brief:
“Carbon rights are tied to land rights. But some countries are nationalising carbon rights, meaning that the government or the public owns the carbon that is in the trees that [Indigenous peoples] own, then what right do they have to use that tree and benefit from it?”
The International Labour Organization Indigenous and Tribal Peoples Convention (number 169), signed in 1989, is a key document when considering Indigenous rights in the context of carbon offsetting schemes.
The landmark agreement contains two important rights for Indigenous peoples. These are the right to self-determination and the right to free and informed consent “prior to the approval of any project affecting their lands or territories and other resources”.
The UN Declaration on the Rights of Indigenous Peoples, adopted in 2007, recognises Indigenous people’s rights to their lands – either legalised or traditionally owned – territories and resources. It also says that states “shall consult and cooperate” to obtain Indigenous people’s free and informed consent.
“These rights already exist; there is no excuse for them to be violated”, stresses Julián Trujillo, a researcher at Gaia Amazonas, an NGO providing guidance in human rights to Indigenous communities of the northeast Colombian Amazon.
However, the reality differs in various African and Latin American countries, which have reported breaches of these rights.
In the northernmost, heavily forested region of the Republic of the Congo, a REDD+ emission reductions programme approved in 2021 by the World Bank led to an unequal benefit-sharing plan for communities. Locals will only obtain 15% of the benefits, according to the organisation REDD-Monitor.
In southern Colombia, poverty and violence drove the Nukak Indigenous community to negotiate selling carbon credits to a national company in 2019, under an “irregular and disadvantageous” contract for Indigenous peoples, Mongabay reported.
Although the project did not materialise, it was criticised by the Indigenous community by the lack of consultation to obtain their free, prior and informed consent, as well as the lack of state support to help people in the community understand the contract and defend their rights.
The lack of state support could lead to further conflicts in the communities due to the misunderstanding of the contracts, said Horacio Almanza, a researcher at the Mexico’s National Institute of Anthropology and History who has worked with communities in the Tarahumara Sierra in northern Mexico.
It is not a matter of creating new rights, but rather situating them in the carbon credits context, Trujillo notes.
Some carbon offset-related rights were established at the COP16 climate summit, held in Cancun in 2010, which delivered a set of environmental and social safeguards to be “promoted and supported” in REDD+ projects in developing countries. These include respect for the knowledge and rights of Indigenous peoples and local communities.
But the Cancun safeguards were agreed upon until COP21 in 2015, and only 26 countries have submitted their safeguard system to UN-REDD – the body that oversees REDD+ projects – according to a new report by the Rainforest Foundation UK.
These safeguards are included in carbon credit certifications, says Sucre. However, the Mesoamerican Alliance of Peoples and Forests calls for offset certification companies, such as ART TREE, to account for the UN Declaration on the Rights of Indigenous Peoples in their certifications as well. Sucre stresses:
“When we want to complain to the certifier that they did not take into account [certain rights], and we want to appeal to that instrument [the UN Declaration on the Rights of Indigenous Peoples], we cannot do it because it is not within their standards.”
Human rights and the rights of Indigenous peoples have also been a contentious topic in more recent UN talks around Article 6 carbon markets.
While these issues have been acknowledged, Carbon Market Watch says they were not “strongly enough” referenced in the outcomes and there was no “specific requirement to obtain free, prior and informed consent from Indigenous peoples and local communities”.
Once a carbon offset project is established, problems related to the administration of the resources and benefits can emerge within the local communities, notes Almanza.
For Silvia Gómez, director at Gaia Amazonas, Indigenous peoples and local communities should be the holders and owners of the carbon offset projects. Her organisation works to help such communities manage their revenue streams and fairly distribute the profits.
There are additional mechanisms that Indigenous peoples, local communities and non-profit organisations are trying to boost to ensure their rights in carbon markets.
Almanza considers that communities could put formal complaints before international courts “as it has been done recently and with good results”.
Finally, speaking on the condition of anonymity, an expert on human rights and Indigenous communities consulted by Carbon Brief says that in some Latin American communities, organised crime has already taken over illegal logging, but it could expand to carbon offset projects if institutions do not tackle the problem and end with impunity.
“The funds could go to those who are now controlling forest management processes”, he warned.
Forest protection is a common form of carbon-offset project.
Around 40% of the credits that have been issued on the voluntary market come from forest protection, management and, to a lesser extent, creation, according to Carbon Brief analysis of data from the Berkeley Carbon Trading Project.
But climate change leaves an uncertain future for how the carbon storage of trees will fare under rising temperatures and more extreme weather events.
Prof Ian Bateman describes the main climate-related risks as the “four horsemen” of the “tree apocalypse”: pests, disease, fire and wind.
Forest fires are already having a noticeable impact on offset projects.
Canada’s recent wildfires burned vegetation at an offset project. A forest offset programme funded by companies including Microsoft and BP was also impacted by US fires in 2021.
Dr Shane Coffield, a postdoctoral researcher in Earth system science at the University of Maryland, does not believe future climate risks are sufficiently considered in offset projects. He tells Carbon Brief:
“If the carbon is going to go back to the atmosphere in 50 years [due to extreme weather], that just means that we haven’t offset our emissions. We actually contributed to making the problem worse.”
Coffield was the lead author of a study assessing the climate impacts on ecosystem carbon storage in California – a state that has generated around one-tenth of the forestry-related voluntary offsets on the market, according to Berkeley data.
The study found that projected carbon storage declines were “particularly high in areas that already have offset projects”, highlighting that there is a “lot of uncertainty”, Coffield says. (See: Do carbon offsets overestimate their ability to reduce emissions?)
Extreme weather is often taken into account in offset projects through a “buffer pool” – carbon credits set aside to cover any future harm that might befall an offset project.
This insurance mechanism aims to guarantee that the purchased credits will still be valid, even if the project is damaged down the line by fire, drought or other issues.
A 2022 study found that wildfires have already used up almost one-fifth of the California forest carbon offsets programme’s 100-year buffer pool. This is equivalent to 95% of the contributions specifically intended to cover all fire risks.
This indicates that California’s insurance is “severely undercapitalised” and unlikely to be able to guarantee the programme’s “environmental integrity” for 100 years, the study said.
The lead study author, Grayson Badgley, a research scientist at climate solutions non-profit CarbonPlan, says buffer pools generally seem to be “far too small”. He tells Carbon Brief:
“If we don’t get the buffer pool right, we have the chance of actually having the programme make climate change worse [and] justifying emissions. So we have to have the numbers absolutely precise.
“We expect drought to get worse in the future. We expect wildfires to get worse in the future. We’re already seeing both of those things happen and I don’t know of a programme that actually takes those sort of shifting baselines into account.”
Offset programmes update their risk assessments as more evidence emerges, but Badgley says not all factor in specific and sufficient risks, both now or in the future.
The map below shows how a fire burned through some of a forest offset project in Oregon during an intense fire season in the western US in 2020.
The total area burned by the Riverside, Beachie Creek and Lionshead fires (red) between 5 August-17 September 2020, laid over the Warm Springs forest offset project (yellow), known as ACR260 in the offsets registry. Analysis showed that around 72% of the project area was burned by the Lionshead Fire. Map: Carbon Brief, adapted from CarbonPlan.
Further effects of climate change also impact forests and other ecosystems. Rising temperatures and drought may lead to widespread regional tree mortality, according to the IPCC.
Coffield notes that temperature “has a huge influence on drying out vegetation” which can lead to plant stress. He adds:
“The temperature’s going up, the rainfall in some places might go up or down, but certainly not enough to compensate for that increased water demand associated with the temperature and the wildfire risk.”
This rising water stress could affect the rate that plants and trees grow via photosynthesis, reducing their ability to remove CO2 from the atmosphere, research suggests.
Currently, forest protection project developers are not required to consider how plants may absorb less CO2 in future when making estimates about how much carbon their projects could offset over time.
Tipping points, where climate change could push parts of the Earth’s system into abrupt or irreversible changes, could also have an impact on land carbon storage.
Another threat is tree pests and diseases, which are spreading more rapidly to different parts of the world due to trade and climate change.
Badgley notes that these uncertainties around future climate-related impacts on trees means offset calculations may become “more mixed up” in future. He adds:
“We’re potentially banking on these forests to do more help in fighting climate change than they’re capable of.”
Carbon-offset providers are facing intense pressure to reform as buyers show less willingness to invest, amid mounting public, media and legal scrutiny of their climate benefits.
Numerous efforts have been launched to improve carbon markets in recent years.
Negotiations around Article 6 carbon markets under the Paris Agreement have given countries an opportunity to build a new UN system that improves on the flawed Kyoto Protocol markets, such as the Clean Development Mechanism (CDM).
Along the way, many civil society groups and countries have championed “high-integrity carbon markets” – for example, with the San Jose Principles.
Ultimately, while observers have welcomed some improvements in the Article 6 system, there remain outstanding issues that could – if left unresolved – compromise their ability to drive meaningful emissions cuts and avoid harming communities. (See: How are countries using carbon offsets to meet their climate targets?)
Article 6 rules are still being developed, including the methodologies and baselines for issuing credits. Ultimately, this will govern what type of credits are allowed under Article 6.
Scott Vaughan from the IISD, tells Carbon Brief: “There’s still stuff that they’re negotiating. There’s always going to be tweaking to some parts of the rules, because it’s complicated. I think they did the right thing though, saying, look, here’s the framework and here are the standards. But here’s a bunch of things that we need to finalise.”
Meanwhile, as it expands rapidly, the voluntary offset market has seen a slew of efforts to improve what remains a largely unregulated system. Among them have been the Integrity Council for the Voluntary Carbon Market (ICVCM), the Voluntary Carbon Markets Integrity Initiative (VCMI) and the Science Based Targets initiative (SBTi).
The Oxford Principles for Net Zero Aligned Carbon Offsetting, which were unveiled in 2020, set out four core principles for the sector:
As the Oxford principles state, the market for such high-quality offsets is currently “immature and in need of early-adopters”.
As the chart below shows, just 3% of credits on the four main registries in the voluntary market, as captured by the Berkeley Carbon Trading Project database, have been issued for carbon removal – coloured red in the figure below – all of them for tree-planting projects. None of the major registries have issued credits for long-term storage, such as in geological reservoirs.
Number of offset credits issued, millions, in the four largest voluntary offset registries, American Carbon Registry (ACR), Climate Action Reserve (CAR), Gold Standard and the Verra (VCS). Blue indicated projects that involve emissions reduction or avoidance, red indicated projects that involve emissions removal and yellow indicates projects that involve a mix of the two. Source: Berkeley Carbon Trading Project. Chart: Carbon Brief.
There has been growing recognition from the sector that some of the offsets on sale are lower quality than others.
In the voluntary offset market, efforts to avoid lower quality credits include the two largest offset certifiers, Verra and Gold Standard, both stopping issuing credits from grid-connected renewable projects except in least-developed or lower-income nations in 2019.
This reflects the reality that renewable projects in relatively wealthy nations are now economically attractive investments without offset money and, therefore, provide no additionality. This means offset purchasers should not be claiming responsibility for the emissions reductions provided by the projects.
Yet there are still many credits available on the market that could undermine the climate action promised by the principle of carbon offsetting.
For example, credits issued by projects started under the Kyoto Protocol before 2020 remain available, despite question marks over how “additional” the associated emissions cuts are.
These credits will be labelled, meaning buyers can clearly differentiate them.
This is highlighted in research from Trove Research and University College London (UCL), which proposes that companies buying offsets can help limit the use of older, poor quality credits.
Above all, credits created under the CDM must be prevented from “polluting” today’s voluntary offset market, Guy Turner, lead author of the study said at the time of publication.
Speaking to Carbon Brief, Turner expands: “I personally would like to see less of them used. Because I think we need to invest new money in new projects, rather than meet our current demand for that stuff that was already there.”
(For more on criticism of CDM credits and details of how they may be used under the new Article 6 carbon market, see: How are countries using carbon offsets to meet their climate targets?)
UCL and Trove’s research also fed into the establishment of the Taskforce on Scaling Voluntary Carbon Markets (TSVCM), which was set up by Mark Carney, the former governor of the Bank of England.
ICVCM – the governance body launched by the TSVCM – unveiled its Core Carbon Principles (CCPs) in July 2023, described as 10 fundamental principles for “high-quality carbon credits that create real, verifiable climate impact, based on the latest science and best practice”.
These are separated into three key pillars: governance, emissions impact and sustainable development.
In addition to the CCPs, the ICVCM has released a framework for accrediting projects, allowing multi-stakeholder working groups to begin assessing projects and providing a CCP label. This allows those interested in supporting carbon-crediting programmes to clearly see which have been judged against the principles – and verified to meet them.
As such, while the ICVCM’s framework does not represent regulation, the group hopes the CCP label will represent quality. The aim is this will grant a premium to the projects and programmes which gain it, ensuring there is value in adhering to the principles and making it likely they will trade at a premium price determined by the market.
Daniel Ortega-Pacheco, co-chair of the ICVCM and director of Biocarbon, tells Carbon Brief:
“Build integrity and scale will follow. The largest measure of our impact will be now that integrity can be consistently delivered across carbon credit brands, because you have common rules, common understanding and we will do our best to assess that. Now it’s time for investors to really mobilise that finance.”
A number of key questions remain around the development of the voluntary carbon-offsets market. These include how technologies such as digital monitoring, reporting and verification should be incorporated, issues about permanence, and the relationship between the voluntary carbon market and Article 6.
But having the initial framework in place gives the ICVCM something to build on, says Nat Keohane, board member of the ICVCM and president of C2ES.
Welcoming the principles framework, Dr Francisco Souza, managing director of the FSC Indigenous Foundation and an ICVCM board member, said in a statement that the CCPs will encourage the development of “high integrity” projects that provide finance for Indigenous peoples, “while also respecting our rights, traditions, cultures and knowledge”.
Projects with Indigenous peoples as stakeholders are already emerging, such as the development of a 30-year forestry protection project in San Jerónimo Zacapexco, Mexico.
Some experts, including those behind the Science Based Targets initiative, have simply stated that offsets in their current form should not be used to make net-zero claims. This sentiment is echoed by Robert Mendelsohn, a forest policy and economics professor at Yale School of the Environment. Speaking to Carbon Brief, he says:
“If we are ever going to have effective voluntary carbon reductions, we must first discredit the existing market. But this will make it much harder for an effective market to start. They will have to regain the public’s trust.
“I believe that an effective market can be created but we must first get rid of these project-based credits and move to a system that looks a lot more like regulation where firms have limited emissions.”
One alternative approach that is being discussed would be to enable companies to channel finance to climate-related projects, without allowing them to claim the outcomes as “offsetting” their own emissions.
“Mitigation contribution” credits issued under the Paris Agreement could potentially already provide a vehicle for this. (See: Why are there ‘double-counting’ risks with carbon offsets?)
Kaya Axelsson, a net-zero policy fellow at the University of Oxford who works on the Oxford principles, explains this to Carbon Brief:
“Why not just say, we have invested in this credit because it’s contributing to emissions reductions in this area…instead of making false claims.”
Time will tell if there will be a new era of carbon-offsets projects, one backed by stronger frameworks, greater transparency and a drive for additionality, which can have a genuine, significant impact on helping countries and companies reach net-zero.
President Donald Trump has been derailing U.S. efforts to cut planet-warming emissions since he moved back into the White House. Now we have a more precise accounting of the expected damage.
The U.S. is currently on track to reduce greenhouse gas emissions just 26-35% below 2005 levels over the next decade, according to new estimates from research firm Rhodium Group.
That’s much less of a reduction than was forecast under the Biden administration. A July 2024 report from Rhodium found that the U.S. had at that point been on track to cut emissions 38-56% by 2035. In other words, the worst-case scenario under Biden last year was still better than the best-case scenario following Trump’s destruction of the country’s decarbonization strategy.
As it stands, the U.S. will miss its 2030 Paris Agreement commitment by a mile — a fact unlikely to trouble Trump, who abandoned the agreement on his first day back in office.
The new Rhodium findings illustrate how swiftly Trump and the GOP have undone the hard-fought energy-transition progress made by the Biden administration.
Three years ago, then-president Joe Biden signed the landmark Inflation Reduction Act into effect, creating generous tax incentives for renewables, home-energy upgrades, and electric vehicles, as well as a host of grant and loan programs aimed at accelerating industries away from fossil fuel use.
But the Trump administration and the GOP-controlled Congress have essentially repealed the law, as well as a host of other environmental protections, like limits on vehicle emissions, that would have helped not only rein in greenhouse gases but also reduce harmful air pollution.
It’s grim news. But inherent in this rapid reversal of progress is, if you squint, a kernel of hope: Trump has proven that things can change very fast. Under a new administration, a rapid change of trajectory could happen again.
Nippon Steel, the parent company of U.S. Steel, is moving forward with its plans to renovate a giant coal-fueled furnace in Gary, Indiana.
The Japan-based steel manufacturer, which acquired U.S. Steel in June, will begin “relining” its largest blast furnace at the Gary Works steel mill in 2026, U.S. Steel CEO David Burritt said this week at an industry conference in Atlanta, details first reported by the Japanese newspaper Nikkei.
Such an investment can extend a furnace’s operating life by up to 20 years — prolonging the company’s reliance on coal-based steelmaking, and potentially delaying America’s broader transition to low-carbon manufacturing methods.
Nippon Steel has committed to spending around $300 million to revamp Blast Furnace No. 14, the largest of four blast furnaces still operating at the sprawling Gary Works complex on Lake Michigan. The Japanese steelmaker said it will spend a total of $3.1 billion across Gary Works as part of a $11 billion capital investment in U.S. Steel’s footprints through 2028.
“Gary Works supports a large number of jobs and demand in the Midwest, and we are moving forward with numerous investment plans to support the industry,” Burritt said at the conference, adding that U.S. Steel and Nippon Steel expect to announce more specific details about their plans soon. (A spokesperson for U.S. Steel confirmed Burritt’s remarks in an email.)
Blast furnaces make the iron that’s turned into high-strength steel, an essential material found in everything from cars, boats, and planes to buildings, bridges, and roads.
The scorching-hot furnaces combine iron ore with purified coal, or “coke,” and limestone to produce liquid iron, which is then moved into a separate furnace to become steel. Only seven of these integrated iron and steel facilities are currently operating in the United States, accounting for about a quarter of total U.S. steel production. But the steel mills are responsible for around 75% of the industry’s greenhouse gas emissions. They’re also among the biggest sources of toxic air pollution in the communities where they operate.
A recent report by the Environmental Integrity Project found the Gary Works complex is a major source of health-harming pollutants like chromium, which can cause breathing problems and increase the risk of lung cancer.
America’s blast furnaces — among the oldest in the world — use specialized bricks that degrade over time. When that happens, companies can decide to undertake a costly and lengthy maintenance process to replace the bricks and prop up aging plants. Or they can put that money toward building cleaner facilities that make use of “direct reduced iron” technology that doesn’t require coal.
Climate advocates and community groups in Gary, Indiana, are urging Nippon Steel to take the second route.
“Today, the company is at a crossroads,” Toko Tomita, campaigns director at the advocacy group SteelWatch, said in a statement. “If this relining decision goes ahead, it would be a slap in the face for communities, and a coffin-nail for Nippon Steel’s reputation on climate.”
Tomita said that relining the Gary Works furnace is “an extremely short-sighted move” that will leave Nippon Steel with outdated facilities at a time when automakers and other major steel buyers are increasingly signaling their demand for products made using lower-emission methods.
At the moment, however, America’s steelmakers seem committed to keeping their coal-based mills up and running.
Along with its four Gary Works blast furnaces, U.S. Steel operates two blast furnaces at its Edgar Thomson plant in the Mon Valley Works in southwestern Pennsylvania — the same complex that suffered a deadly explosion on Aug. 11 at a coke-producing plant. Nippon Steel has announced plans to schedule all six blast furnaces for relining or major repairs by 2030 in order to “extend their useful lives for many years to come.”
Cleveland-Cliffs, the only other U.S. steelmaker that uses coal-fueled facilities, operates blast furnaces across its steel mills in Indiana, Ohio, and Michigan. The Ohio-based firm has said it plans to reline a furnace at its Burns Harbor steel plant in Indiana in 2027.
On an earnings call last month, Cleveland-Cliffs CEO Lourenco Goncalves confirmed that, in addition to the relining, the company is no longer pursuing a federally supported project to build a new green steel facility in Middletown, Ohio. Cleveland-Cliffs is instead working with the Trump administration to “preserve and enhance” its Middletown steel mill using fossil fuels.
The Department of Energy has once again delayed the retirement of an oil- and gas-fired power plant, adding to concerns that the Trump administration aims to prevent any fossil-fueled power plant from closing during its term.
Today, the Trump administration reissued an emergency order forcing the Eddystone power plant outside of Philadelphia to stay open another 90 days. The plant’s two main units, totaling 760 megawatts, were originally set to shutter on May 31, but one day before their scheduled retirement, the DOE issued an emergency stay-open order, which expired today.
Eddystone is not the only fossil-fueled power plant being forced to stay open past its closing date. Last week, the Trump administration extended its emergency stay-open order for the J.H. Campbell coal plant in Michigan, which was also slated to close in May.
Before this year, the DOE had wielded its emergency powers sparingly, issuing orders mostly in response to utilities or grid operators who requested federal restrictions be lifted during times of extreme strain on the grid. It has never before used Section 202(c) of the Federal Power Act to intervene in a power plant retirement, according to Caroline Reiser, senior attorney for climate and energy at the Natural Resources Defense Council.
But under President Donald Trump, the agency is invoking those powers to extend the life of fossil-fueled units that grid planners had already deemed unnecessary, raising costs for consumers and stalling the transition to carbon-free energy.
In today’s order, the DOE once again pointed to an “emergency” in portions of the electricity grid operated by PJM Interconnection, which serves Washington, D.C., and 13 states from Illinois to Virginia. The agency cited recent reports from PJM that found, among other things, that the grid operator could struggle to keep up with demand this summer during heat waves.
The DOE said in the new order that the emergency conditions that led to the first directive are still in place, as summer isn’t over. The Eddystone station’s units 3 and 4 generated over 17,000 megawatt-hours during June, per U.S. Environmental Protection Agency data cited by DOE. They also ran for a combined total of 47 hours during a three-day spell of hot weather in late July.
The order also cites a widely criticized report that the DOE released in July, which energy experts say vastly overstates the risk of grid outages. The citation further confirms fears that the Trump administration will use the methodologically flawed report to continue to justify keeping aging, expensive fossil-fueled power plants online.
PJM has supported both stay-open orders, calling each one a “prudent, term-limited step” that would allow the DOE, PJM, and Eddystone’s owner, Constellation Energy, to analyze the longer-term need for these generators.
“PJM has previously documented its concerns over the growing risk of a supply and demand imbalance driven by the confluence of generator retirements and demand growth,” a spokesperson said in an emailed statement about the new order. “Such an imbalance could have serious ramifications for reliability and affordability for consumers.”
Regulators, energy experts, and advocates have questioned the DOE’s justification for keeping the Eddystone and the J.H. Campbell plants open. They point to the fact that the power plants’ owners, state officials, regional grid operators — including PJM itself — and other experts spent years evaluating the impact of closing these facilities and decided it was safe to shut them down.
For its part, the Eddystone plant has operated infrequently in recent years because the facility was not economical. Constellation filed a deactivation notice with PJM in December 2023, which was approved by the grid operator months later following a study that “did not identify any reliability violations” from the shutdown.
In June, state utility regulators and environmental groups filed rehearing requests with the DOE in an attempt to force the agency to reconsider its emergency orders. The agency denied those requests, clearing the way for critics, like the state of Michigan, to take the agency to court.
Advocates fear that these directives, taken together with recent executive orders and other DOE moves, signal the Trump administration’s commitment to keeping every fossil-fuel plant running, no matter the consequences.
In total, just over 38 gigawatts’ worth of power plants are slated to close between now and the end of 2028, more than two-thirds of which is coal.
Blocking all planned closures of fossil-fueled power plants would be disastrous for efforts to decarbonize the U.S. power grid — and also for consumers, who are already navigating fast-rising power bills. It could cost utility customers billions of dollars each year to prop up this unnecessary infrastructure, according to an August report from research firm Grid Strategies.
The administration’s statements have done little to quell advocates’ fears. In fact, a Tuesday post on X from the DOE was crystal clear.
“Coal plants will STAY IN OPERATION,” it read.
It sure looks like the Trump administration is not going to let any coal plants close down during its term — no matter the cost to consumers and to the climate.
About 27 gigawatts’ worth of coal is slated to retire in the U.S. between now and the end of 2028, per U.S. Energy Information Administration data, equal to roughly 15% of the country’s current coal fleet.
Coal plant retirements have been the engine of U.S. progress in cutting emissions. As natural gas became more abundant and renewables plummeted in cost, more than 140 gigawatts’ worth of coal plants have retired since 2011, when the dirty energy source peaked at nearly 318 GW of generation capacity. Carbon emissions from the power sector have fallen steadily over that same period.
Now, the U.S. gets more power from wind and solar alone than it does from coal, an extremely carbon-intensive form of energy that provided around half of the country’s electricity at the start of the millennium.
But President Donald Trump is trying to put a stop to coal’s demise. On his first day in office, Trump declared a national energy emergency that experts have called baseless and which is now being challenged by 15 states in court. The “emergency” is also belied by Trump’s efforts to obstruct clean energy, which for years has accounted for over 90% of new electricity added to the grid.
Trump has since built on that edict by availing himself of emergency powers to force fossil-fuel plants to stay online past their scheduled retirement.
In May, the Trump administration issued 90-day stay-open orders for two facilities set to close days later: the J.H. Campbell coal plant in Michigan and the Eddystone oil- and gas-burning plant in Pennsylvania. Trump just reupped those mandates for another 90 days. Families and businesses will pay the price: The first three months of continuing to operate J.H. Campbell alone could cost consumers as much as $100 million, estimated Michigan’s Public Service Commission chair.
And in July, the Department of Energy released a specious report that overstates the risk of grid blackouts. States are attempting to make the agency fix the report, which they expect will be used to justify additional emergency stay-open orders for other coal plants. Blocking all planned closures of fossil-fuel power plants could result in billions of dollars in additional yearly energy costs for consumers by the end of Trump’s term.
The administration’s desire to revive America’s dirtiest form of power will only exacerbate the nation’s brewing utility bill crisis. The price of electricity has been rising for several years, and despite promises of slashing energy costs, Trump’s pro-coal, anti-renewables agenda is making things even worse.
The Trump administration’s order to stop construction of the nearly completed Revolution Wind project is putting hundreds of offshore workers out of a job — including dozens of local fishermen who voted for President Donald Trump and are asking him to reverse course.
A week ago, the acting director of the Bureau of Ocean Energy Management, Matthew Giacona, ordered the Danish wind developer Ørsted to stop all offshore work on the Revolution Wind farm so the federal government can“address concerns related to the protection of national security interests of the United States.” Giacona did not specify the nature of those security concerns.
Construction began on the 704-megawatt project in January 2024 and is now 80% complete, according to Ørsted. The wind farm is being built off the coast of Massachusetts and Rhode Island in a federally designated “wind energy area” that received sign-offs from multiple branches of the military, Canary Media reported Sunday.
Though often seen as opposed to offshore wind, many New England fishermen have made peace with the industry in recent years.
They increasingly rely on part-time salaries from wind companies as fishing revenues dry up. Over the past two years, Ørsted put 80 fishermen to work on the Revolution Wind project, paying out $9.5 million to captains, deckhands, and fishing boat owners, according to Gary Yerman, a Connecticut-based fisherman who founded and leads a fisher cooperative called Sea Services North America, which has an active contract to work on Revolution Wind.
“Most of us are Trump voters, and we still believe in a leader who builds. That’s why we’re asking President Trump to reverse the stop-work order issued to Revolution Wind by Interior,” Yerman told Canary Media.
The stop-work order echoes a similar one the Interior Department gave in April that froze all offshore work on New York’s Empire Wind project — a move that grounded Sea Services’ fishermen for a month, until Trump lifted the ban.
Yerman and other commercial fishermen remained quiet the last time Trump’s assault on a wind farm put them out of work. This time they’re speaking out.
“It’s madness to stop a project that already had permits,” said Jack Morris, a Massachusetts-based scalloper and manager for Sea Services who voted for Trump. “This is not something any of us planned for: the captains, the crew, the shore engineers, the people we buy food from for our trips.”
Ørsted was one of the first firms building turbines in U.S. waters to employ local fishermen, offering Sea Services a contract in 2021 to perform safety and scout tasks. The cooperative helped build Ørsted’s South Fork Wind — America’s first large-scale offshore wind farm, which went online last year.
Today, it’s common for wind developers to rely on local U.S. fishermen. Avangrid and Vineyard Offshore, codevelopers of the embattled Vineyard Wind project off the coast of Massachusetts, have paid out about $8 million over the past two years directly to local fishermen and vessel owners.
“If the infrastructure and pilings are already in, what good is stopping now?” fisherman Tony Alvernaz told Canary Media when asked about the Revolution Wind pause. A Massachusetts fisherman unaffiliated with Sea Services, Alvernaz works part-time for Vineyard Wind, assisting with the ongoing construction of its 62 turbines. Of those, 17 are already sending power to the grid.
Alvernaz is concerned about the Trump administration’s pattern of halting wind projects without warning and with little justification. Trump has already pressed pause on two of the five offshore wind farms currently under construction in America today.
In a statement Monday, an Ørsted spokesperson said Revolution Wind supports more than 2,500 jobs around the U.S., including “hundreds” of local offshore jobs.
Commercial fishermen have spent a total of 1,109 days working at sea for Revolution Wind, according to Yerman. Now, sitting at the docks due to the Trump administration’s stop-work order, the 15 fishermen who planned to be at sea, working 10-day shifts throughout this month, will get paid nothing.
“Our cooperative only invoices when our boats are on active duty. Fishermen are paid for the days they work, not for standby,” Gordon Videll, CEO of Sea Services, told Canary Media. The group is calling on Trump to lift the ban so that its members can resume the job, which would have involved eight more fishermen helping with an offshore substation this fall.
The extra income from Revolution Wind has been a lifeline, particularly for scallop fishermen who, in recent years, have been severely restricted in how much they can fish.
Strict federal quotas have been put in place to allow scallop populations to rebuild after years of being overfished, according to Morris, but that has meant scallopers — who form the majority of Sea Services’ members — are off the water for about 10 months a year.
Before the pause on Revolution Wind, scalloper Kevin Souza expected to make an additional $200,000 working on the project as a part-time boat captain for two years. Souza told Canary Media in February that, had he stuck to scalloping alone, he’d be “lucky” to earn $100,000 in a single year. The deckhands he hires only bring in around $30,000 per year working on scallop boats, but the offshore wind gig makes it possible for them to earn a “middle-class wage,” said Souza.
Souza has recruited both of his sons, his nephew, and other young people from longtime fishing families to work for the wind industry. They might have otherwise left the scallop industry if not for the supplemental income, he said.
As a group, America’s commercial fishermen have long been loyal to Trump. Last week’s order is shaking that confidence.
“I can’t think of one guy who isn’t a Trumper in our co-op. We’re blue-collar guys (and some gals too) who get up before dawn, work with our hands, and we trusted him to look out for us. The truth is, we love President Trump,” Yerman said.
In New Bedford, Massachusetts, home to the country’s most profitable fishing port, “TRUMP 2024” flags fly from dozens of boats docked in the harbor. A few of those crews work for the offshore wind companies, and at least one captain lowers his MAGA flag before setting out to the wind farms, according to Rodney Avila, a Sea Services fisherman.
That kind of faith makes Trump’s pause on Revolution Wind even more gutting.
“It’s like having the rug pulled out from under you. … Nobody understands why Trump did it. I don’t know what Trump’s agenda is,” said Morris.
Trump’s attacks on wind have dried up job prospects for local fishermen up and down the East Coast. His administration’s hostile actions have thrown sand in the gears of a New Jersey wind farm that planned to start construction in the next three years, Maryland’s first offshore wind farm, and another wind project off the coast of Maine.
In addition to targeting individual projects, the Trump administration has initiated policies intended to undermine the entire sector: killing offshore wind leasing, pausing permitting for wind farms, and sunsetting tax credits critical to their economic viability.
Many fishermen, including those who have pocketed thousands by working at offshore wind farms, remain wary of the companies building turbines out at sea.
“No fisherman loves new structures in the water, but we all have grandkids,” Roy Campanale, a Sea Services member based in Rhode Island, told Canary Media. “We’ve lived with the water getting warmer, watched the fish move north, and had to adapt again and again.”
Trump’s pause on Revolution Wind imposes yet another hardship.
Alvernaz voted for Trump and opposes certain wind farms that he believes pose a risk to his favorite fishing grounds. He said that he does not support Revolution Wind due to its placement on Cox Ledge, a swath of seabed identified by the National Oceanic and Atmospheric Administration as critical habitat for Atlantic cod.
But if Trump decides to freeze Vineyard Wind, for example, Alvernaz said he “would not be happy.”
Alvernaz has worked on the water for over 40 years. Yerman’s fishing career spans 50 years. With nearly a century of combined experience in New England’s waters, neither of them are buying the Trump administration’s excuse for pausing Revolution Wind.
“Something about national defense? How can it be an issue of national defense if there are other wind farms out there with the same technology?” pondered Alvernaz. “It’s kind of odd.”
President Donald Trump has put energy front and center during his second term. On his first day in office alone, he froze spending under the Inflation Reduction Act, took a wrecking ball to offshore wind, and declared an “energy emergency,” citing affordability and grid reliability issues.
Critics have dismissed the emergency as a fabrication. Attorneys general from 15 states are challenging it in court. And Trump, whose policies are slowing the construction of cheap, clean energy, is not exactly acting like there’s an emergency at hand.
Take the Revolution Wind project as the latest example. Last Friday, the Trump administration ordered developer Ørsted to stop all construction on the huge, nearly complete project, citing unspecified “national security” reasons. It’s the second time the government has issued such an order to an offshore wind project that would’ve brought clean power to the Northeast.
The stoppage poses a real threat to the grid in New England, which is home to some of the highest power prices in the nation.
Revolution Wind was supposed to start delivering power next year — very soon in grid-planning terms. ISO-New England, the region’s grid operator, said Monday that it is banking on the wind farm to help meet demand and maintain power reserves. Further delays will continue the region’s reliance on natural gas, which ISO-New England has warned is in short supply and which is subject to price volatility.
Blocking major energy projects from coming online is not exactly consistent with declaring an energy emergency.
And yet, the Revolution Wind pause is just one example of how the administration is stymieing clean energy deployment. In recent months, it has rolled back federal subsidies and grants and implemented new federal leasing rules under which renewables are doomed to fail. Because of these policies, the country is expected to build less than half as much clean energy over the next decade — an outcome experts widely agree will raise power prices.
In fact, the only place the administration has acted as if its emergency is real is when it comes to preserving fossil-fuel power plants on the brink of closure.
The U.S. Department of Energy recently extended its emergency order barring a Michigan coal plant from retiring — a decision that cost the plant’s owner $29 million in its first five weeks. And on Thursday, the DOE extended another order keeping a Pennsylvania gas- and oil-fired peaker plant online. Regional grid operators had previously deemed both plants safe to close.
The moves reveal the incoherence at the heart of Trump’s energy policy, which exploits a questionable emergency to prop up expensive and unnecessary fossil-fueled power plants on the one hand — and blocks the fastest-growing and lowest-cost form of energy on the other.
Clean energy is getting its own day of action
If you’ve read even one edition of this newsletter since Trump took office, you’ll know that clean energy is facing a crisis in the U.S. Sun Day aims to elevate that message and boost the transition from fossil fuels with a nationwide day of action coming up on Sept. 21, Canary Media’s Alison F. Takemura reports.
The brainchild of climate journalist and activist Bill McKibben, Sun Day looks a lot like Earth Day. Advocacy groups and individuals will hold more than 150 events across the country, offering tours of homes with rooftop solar arrays, EV test drives, and other just-plain-fun activities like performances and face painting. You can find an event near you via the Sun Day website, or tap into Sun Day’s toolkit to host an event of your own.
Two nuclear plants inch closer to “renaissance”
Two retired nuclear plants each took a step toward restarting this week. On Monday, the Federal Energy Regulatory Commission approved a waiver that will let the Duane Arnold plant in Iowa move toward restarting, which plant owner NextEra Energy hopes to do by 2029. And in Michigan, the Palisades plant has returned to operational status after being decommissioned for three years. The designation just means it can start receiving fuel again — it’s not yet generating electricity.
The Trump administration is pushing for a “nuclear renaissance,” both through the development of new advanced nuclear reactors and the reopening of large, retired facilities. The administration and nuclear advocates say the power source can help meet growing electricity demand, though the U.S.’s most recent attempt to build a new nuclear plant took years and billions of dollars more than expected.
‘It’s madness’: New England fishermen who rely on salaries from their work with Revolution Wind call on Trump to reverse the Interior Department order stopping work on the offshore wind project — and point out that most of them voted for the president. (Canary Media)
From misinformation to memorandum: The Trump administration has turned “capacity density” — a fossil-fuel industry talking point that argues wind and solar take up too much land for the power they produce — into a criterion for federal leasing that renewables are doomed to fail. (Canary Media)
Keeping solar affordable: With power prices on the rise, developers of bill-cutting solar projects for low-income households are finding ways to move projects forward despite federal funding rollbacks. (Canary Media)
Fossil-fuel injustices: A peer-reviewed study finds premature deaths and illnesses stemming from oil- and gas-related air pollution disproportionately affect Black, Indigenous, Asian, and Latino communities. (Los Angeles Times)
The state of permitting: State lawmakers across the U.S. have introduced a total of 148 bills aimed at restricting clean energy development this year via increased local approvals, expanded setback requirements, and other measures, though only a handful of those proposals have passed. (Latitude Media, Clean Tomorrow)
Visualizing emissions: A research group’s new Methane Risk Map visualizes invisible methane emissions and the harmful pollutants released alongside them, in hopes of warning neighbors about their health effects. (Inside Climate News)
A red flag for nuclear: Former Nuclear Regulatory Commission leaders say the Trump administration’s attempts to exercise control over the independent agency have led senior leadership to depart, “creating a huge brain drain” that raises the risk of accidents. (Financial Times)
Good news for solar: Despite federal setbacks, the U.S. is on track to build a record amount of new solar this year, with the renewable resource estimated to make up more than half of generating capacity added in 2025, according to the U.S. Energy Information Administration. (Canary Media)
Gas plans fizzle: In the two years since Texas lawmakers created a $7.2 billion state fund to jump-start the construction of more gas-fired power plants, officials have approved only two proposals totaling just $321 million, and developers have pulled other applications over supply chain issues and profitability concerns. (Texas Tribune)
The Trump administration has extended its order to keep a Michigan coal-fired power plant running until November, well past its planned closure in the spring. It’s the latest move in a push to force dirty, expensive power plants to keep operating, which experts warn could saddle Americans with billions of dollars in unnecessary electricity costs.
Just days before the J.H. Campbell plant was set to shutter in May, the administration ordered it to stay open for 90 days — an unprecedented federal intervention in state-regulated utility operations. That order has already cost Midwest utility customers millions, and Michigan’s top utility regulator estimates that keeping the aging plant open longer could burden consumers with more than $100 million in unnecessary costs.
The Department of Energy’s Wednesday extension adds weight to concerns from states, environmental advocates, and clean-energy industry groups that the administration intends to wield emergency powers meant to address true threats to grid reliability to prevent any fossil-fueled power plant from closing nationwide. Doing so would cost consumers between $3 billion and nearly $6 billion per year by the end of President Donald Trump’s term, per an August report from consultancy Grid Strategies.
“The order purports to override the considered judgment and careful work of many federal, state, and regional bodies who actually have authority to keep the lights on,” Michael Lenoff, senior attorney for nonprofit Earthjustice, said in a Thursday statement.
Lenoff is leading litigation against the DOE’s initial order from May. Michigan’s Attorney General Dana Nessel has also challenged that order in court, after the agency failed to respond to requests from environmental groups and eight state utility commissions seeking a rehearing of the decision.
To keep fossil-fueled plants running, the Trump administration is taking advantage of Section 202(c) of the Federal Power Act, which gives the DOE the authority to take temporary action to address nearterm grid-reliability emergencies. But many groups say there is no such crisis: Wednesday’s order from Energy Secretary Chris Wright, a former gas industry executive and well-known denier of the climate-change crisis, “points to no evidence of an imminent emergency requiring Campbell to keep racking up the bills paid by customers in Michigan and nearby states,” Lenoff said.
“Despite already forcing the plant to run for 90 days, [Wright] points to not a single instance where the plant was needed to keep the lights on,” Lenoff said.
Consumers Energy, the utility that owns J.H. Campbell, reported in late July that it cost $29 million to operate the plant in the first five weeks of the DOE’s stay-open order.
“The coal-fired J.H. Campbell plant has reached the end of its life. Michigan cannot afford to let political interference prolong its operation,” Justin Carpenter, policy director for the Michigan Energy Innovation Business Council, said in a Thursday statement. “So-called temporary extensions only keep an unnecessary, inefficient plant alive, extending its pollution and high costs.”
Later in May, the DOE also used its Section 202(c) authority to order the Eddystone oil- and gas-burning plant in Pennsylvania to stay open through the summer. It was set to close this year too, and, as with the J.H. Campbell plant, utility regulators and regional grid operators had determined that shutting it down would not threaten grid reliability. The DOE’s 90-day order for the Eddystone plant is set to expire in late August.
Lawmakers, advocates, and industry experts are increasingly concerned that the Trump administration intends to apply its Section 202(c) authority more broadly. In particular, critics fear a DOE report issued in July will be used to justify future orders — even though its methodology is severely flawed.
The document was written to comply with an April executive order from Trump that tasks the agency with taking unilateral authority over power-plant closures, circumventing decades-old structures that utilities, state and federal regulators, and regional grid operators follow to determine when power plants can close or when they must stay open.
Earlier this month, clean-energy trade groups and nine Democrat-led states filed rehearing requests with the DOE asking it to redo the July grid-reliability report. They argue the study uses cherry-picked data and flawed assumptions to declare that the U.S. faces a hundredfold increase in grid blackout risks absent federal intervention in power plant operations.
Running aging power plants is expensive for utility customers, both in terms of direct costs on energy bills and the indirect costs of crowding out new, cheaper renewables. Utilities and independent energy developers will build less solar, batteries, and wind power if those plants stay online.
The DOE’s moves come as electricity prices are rising at more than twice the rate of inflation across the country. Wright and Trump have falsely claimed that renewable energy is to blame for that trend.
“By illegally extending this sham emergency order, Donald Trump and Chris Wright are costing hardworking Americans more money every single day for a coal plant that is unnecessary, deadly, and extremely expensive,” Laurie Williams, director of the Sierra Club’s Beyond Coal Campaign, said in a Thursday statement. “While Donald Trump and Chris Wright decry this made-up ‘energy emergency,’ they are simultaneously limiting our access to cheap, reliable, renewable energy.”
While China leads the world in both the production and adoption of clean energy tech like solar and EVs, the country has been slower to tackle decarbonizing heavy industry. That is starting to change.
In July, the Chinese state-owned steelmaker HBIS Group agreed to sell more than 10,000 metric tons of green steel to a buyer in Italy. The agreement set a deadline for delivery by the end of August. That same week, Australian Prime Minister Anthony Albanese visited China and pledged to work together to build out the green steel industry.
Meanwhile, in the U.S., steel producers are backing away from earlier commitments to produce green steel. Just before President Donald Trump’s inauguration in January, the Swedish steelmaker SSAB pulled out of negotiations for $500 million in federal funding to back a project to make iron with green hydrogen. In June, Cleveland-Cliffs abandoned its own green steel effort in Middletown, Ohio, after the Trump administration pressed the steelmaker to use a $500 million Biden-era grant to ramp up coal-fired iron production. Nippon Steel pledged to modernize U.S. Steel after securing Trump’s support for a $15 billion acquisition of its American rival in June, but the Japanese giant’s reputation as a “coal company that also makes steel” suggests the merger could extend the life of blast furnaces in Indiana and Pennsylvania.
“A lot of the rhetoric around competitiveness with China makes it seem like we think we must not fall behind. Stories like this make clear we already are behind,” said Marcela Mulholland, a former official at the Department of Energy’s Office of Clean Energy Demonstrations who now leads advocacy at the nonpartisan climate group Clean Tomorrow. “It is happening. The green steel example is just one of many.”
China produces a staggering amount of steel each year — more than 1 billion metric tons. About 90% is made with a two-stop process that relies on coal. First, iron is smelted from ore in a coal-fired blast furnace. Then the iron is transformed into steel in a basic oxygen furnace. About 10% of the country’s steel is made with an electric arc furnace, a process that – if powered by green electricity – is much cleaner, but depends on a steady supply of scrap metal as a feedstock. (The U.S. has a decided advantage with this particular technology since most of the steel that the nation produces uses scrap metal in EAFs.)
China has yet to widely implement the technology known as direct reduction of iron, or DRI, which typically relies on natural gas to produce iron but which can also use hydrogen. The country’s supplies of the former fuel are limited, spurring it to experiment with ways to conduct DRI using the latter.
China has many small-scale pilot projects manufacturing steel with hydrogen, but most involve minimal volumes of the material. For example, the country’s No. 2 steelmaker, Angang Steel Co., is producing just 10,000 metric tons of iron from green-hydrogen-fueled DRI per year. HBIS is shipping that volume of steel to Italy this month alone. Only HBIS and another major producer, China Baowu Steel Group, are producing green steel with hydrogen in significant quantities, according to research published last month by the Helsinki-based nonprofit Centre for Research on Energy and Clean Air.
How clean the hydrogen is that China uses to make steel is a complicated question.
Hydrogen – the smallest molecule – is already widely used in industrial processes and offers a cleaner alternative to fossil fuels since it produces no carbon dioxide when burned. Yet the vast majority of the global supply of hydrogen is made through methods that use fossil fuels and generate planet-heating emissions. When made with electrolyzers powered by renewable energy, hydrogen produces almost no emissions at all, but production of this form – green hydrogen – is nascent and comes at a high premium. (DRI using green hydrogen paired with EAFs is the highest – but nearly nonexistent – standard for producing green steel.)
Headquartered in Hebei province, HBIS started experimenting with lower-carbon steel in part by using hydrogen captured from its coking plants, where coal is roasted at more than 1,110 degrees Fahrenheit to cook off contaminants and produce an industrial-grade fuel. Roughly 60% of the gas emitted during the process is hydrogen.
It’s unclear how much of the steel HBIS is shipping to Italy is made with iron that employs hydrogen produced from industrial waste processes rather than the green stuff made from electricity generated by nearby renewables. HBIS did not respond to a request for comment.
But David Fishman, a principal at the Shanghai-based energy consultancy The Lantau Group, said “there are quite a few” sources of hydrogen made with renewable power near HBIS’s facility in northern China. He noted that HBIS has a strategic partnership with the China National Petroleum Corp., which launched its first large-scale demonstration project to make green hydrogen in 2023.
The export deal may be a sign of China raising its ambitions for cleaner steel. The national government had set a target for 15% of steel coming from EAFs by the end of this year. But that steelmaking capacity has remained at 10% for more than a decade.
Part of the problem is that provincial steel targets are at odds with the policies set in Beijing. Though the national government opened China to imported scrap steel that could be used in EAFs, imports halved in 2024 compared to the previous year, according to the Centre for Research on Energy and Clean Air analysis. Ten provinces, meanwhile, ramped up production of coal-made steel in the first half of this year, bringing down prices and disincentivizing more costly green investments, said Xinyi Shen, the China team lead for the Finnish nonprofit, who authored the report.
But if China can deepen its stockpiles of scrap steel, the country could more quickly build out a lower-carbon steel industry using EAFs while it waits to improve technology on green hydrogen that can bring down costs of fully decarbonized steel, Shen said.
“This is a more promising way to produce low-carbon steel,” she said. “For hydrogen steelmaking, it depends on the progress of green power.”
The bottleneck, she said, is “always the feedstock for DRI.”
But two recent policy changes on renewable power could incentivize Chinese companies to use more of the nation’s vast solar and wind resources to generate green hydrogen.
The first, called the 430 policy, took effect on May 1 and requires that new distributed solar arrays — like those on buildings’ rooftops — first power the facility they are sited on before selling any surplus electricity onto the grid. The second, dubbed the 531 policy, eliminates the guaranteed “feed-in tariffs” that renewables projects long benefited from in China, and requires new solar and wind farms to sell electricity on the spot market.
Whether policies that direct renewable power away from the grid benefit hydrogen producers by making that power more available to them depends on the provincial-level strategies for the fuel, which vary, Shen said. But the emergence of overseas buyers willing to pay more for steel made with green hydrogen could drive the market, she said.
Starting next year, the European Union, of which Italy is a founding member, is set to fully implement its Carbon Border Adjustment Mechanism. The carbon tariff essentially levies an extra cost on imports made with more planet-heating pollution. That means China’s coal-fired steel is about to become less competitive. While China could ramp up scrap-based EAF steel, Shen said the quality of that product tends to be very low, making it unappealing for export. The Italy deal, according to the Boston Consulting Group, shows the levies are creating a market for truly green material.
“This development holds significant implications,” Nicole Voigt, the Boston Consulting Group’s global lead of metals, told Canary Media. “China’s commitment clearly highlights its intent to seize commercial opportunities in the green steel market, especially in Europe.”
It’ll take time for the cost to come down. But China “overall has a long-term direction for carbon neutrality,” Shen said. “This gives companies and investors confidence and certainty to invest into newer technologies.”
Under the previous administration, the U.S. pumped billions of dollars into green hydrogen and clean industrial projects, and made tax credits for renewables available into the 2030s. Even then, America hardly employed all the policy mechanisms at play in China. The federal clean-industry program where Mulholland worked supported a few dozen projects, almost all of which saw their funding yanked away by the Trump administration this spring. Last year alone, China had nearly twice the number of low-carbon industrial demonstration projects. This year, Beijing funded a second set of more than 100 new projects.
“The investment into these new technologies will need a long, stable policy environment,” Shen said. “Long-term, the political goal is there here in China.”
A correction was made on Aug. 18, 2025: A previous version of this story incorrectly stated that basic oxygen furnaces directly burn coal.
Massachusetts has taken another significant step toward its goal of a fossil-fuel-free future.
Last week, state regulators issued an order changing who pays when a new customer wants to connect to the gas system, shifting the burden from gas utility consumers as a whole to the household or organization that requests the hookup. Utilities have 30 days from the date of the order to file plans that reflect the new payment guidelines for consideration by regulators.
It may seem like a small change, but it’s actually a pretty big deal, advocates said.
“It means the expansion of the gas system will be much slower than it otherwise would’ve been,” said Mark Dyen, a climate activist working with advocacy groups Gas Transition Allies and 350 Mass. “It says, ‘If you want to add to that for your own benefit, you can pay for it.’”
Massachusetts has for years been at the forefront of efforts to transition away from natural gas. In December 2023, state utility regulators issued a sweeping order — the first of its kind in the country — that made clear the state’s goal is to move away from fossil-fuel use as it aims to reach net-zero carbon emissions by 2050. The 2023 order laid out a framework for how gas utilities will be expected to participate in this evolution.
Last week’s decision on who should pay for gas-line extensions is the latest effort to turn those principles into practice.
Under the old rules, a new customer that wants to hook up their building to gas generally does not have to pay out of pocket: The cost is spread out among all the utility’s customers over the course of several years on the assumption that the newcomer’s future fuel use will create enough revenue to cover the initial price, a practice known as “line-extension allowances.” In 2023, the average cost of such an installation was $9,000, for an annual total of more than $160 million statewide, according to an analysis filed in the case by research firm Groundwork Data.
“Existing customers are subsidizing these new customers,” said Kristin George Bagdanov, senior policy research manager for the nonprofit Building Decarbonization Coalition. “It’s a misalignment of who’s shouldering the costs.”
In their ruling last week, Massachusetts’ regulators agreed with this stance and also declared that the existing approach runs counter to the state’s climate goals by encouraging greater adoption of natural gas. Plus, they said, the current system increases the chance that customers will be left paying for unneeded infrastructure, as more homes and businesses leave the gas system for electricity.
Typically, utilities calculate a 10-year payback period for commercial connections and 20 years for residential. However, as more customers adopt energy-efficiency measures, switch to electric appliances, and even electrify completely, their gas usage — and therefore the revenue they generate for utilities — will drop, extending the payback period, argued Massachusetts Attorney General Andrea Campbell in an October filing to state utility regulators.
Currently, more than half of Massachusetts homes are heated with natural gas. However, between 2021 and 2024, about 90,000 households installed heat pumps using incentives from energy-efficiency program Mass Save; the true total, including installations that didn’t go through the incentive program, is likely higher. The state is aiming to get 500,000 households to adopt heat pumps between 2020 and 2030.
“It really doesn’t make sense for existing ratepayers to pay for people to join when we are actively transitioning people off the system,” said Sarah Krame, a senior attorney for the Sierra Club’s Environmental Law Program. “The economics of that don’t make sense anymore. We’re no longer in that world.”
Massachusetts joins a handful of other states addressing the issue of line-extension allowances. Over the past three years, these subsidies have been reduced or eliminated in six states, and another six and Washington, D.C., are now considering reforms, according to the Building Decarbonization Coalition. In 2022, California became the first to do away with the practice. In June of this year, Maryland utility regulators ended the allowances, and New York state legislators passed a bill that will do the same if it becomes law.
“This is definitely a trend we’re tracking,” George Bagdanov said. “It’s part of the larger movement to reevaluate business-as-usual gas system operations.”
A clarification was made on Aug. 14, 2025: This article has been updated to reflect that there will still be a round of comments taken on the new plans utilities must file.
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