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What are offsets?

Environmental offsetting enables a company, country or individual to be legally or morally allowed to pollute or otherwise damage the environment as long as they pay someone else somewhere else to attempt to compensate for some or all of the negative consequences. The most common offsets are carbon offsets and biodiversity offsets, but there have been discussions about introducing ecosystem and even cultural offsets.

This section focuses on carbon offsets. To read more about biodiversity or other offsetting visit

What are carbon offset projects?

Carbon offsets create carbon credits which businesses, countries and individuals can buy to compensate for emissions reductions they would otherwise have to make. Carbon offsets are a key part of most existing and planned carbon trading schemes, though they have now been ruled out of the EU Emissions Trading System from 2020 onwards. Carbon offset credits can be bought voluntarily by those wishing to assuage guilt or show their green credentials, but the majority are bought by businesses and governments legally bound to reduce their emissions, or by governments seeking to strengthen the carbon trading market.

Carbon offsetting in general has a number of systemic flaws, most of which are dealt with in Fern’s report Trading Carbon. How it works and why it is controversial and briefing Designed to Fail. Carbon Trade Watch also outlines a number of offsetting projects that have intended and unintended negative consequences.

Forest carbon offsets are particularly problematic as forest carbon sinks can easily become carbon sources. Carbon dioxide through deliberate human activities such as intensified forest harvests and changes in land use, as well as natural events such as pest infestations, diseases and forest fires. Other concerns unique to forest carbon offsets are the impossibility of measuring the amounts of carbon being stored and sequestered by forests. For more information about the problems with forest carbon offsets see Carbon Discredited: Why the EU should steer clear of forest carbon offsets and Counting the cost: forest credits and their effect on carbon markets.


Most recent publications

FERN's contribution to 2015 climate change agreement

FERN's contribution to the EU's upcoming discussion on the 2015 climate agreement. It highlights the importance of fighting the root causes of deforestation, of addressing forest governance, and of dealing with reducing fossil fuel consumption through direct regulatory policies rather than through carbon markets.

NGO Report reveals why EU should not fund forest carbon projects

Ten years ago, the EU invested over 1.5 million Euros in the N’hambita carbon project in Mozambique, a model scheme to show how forests could be used to offset industrial emissions. This press release coincides with the release of a report – ‘Carbon Discredited' -  explaining why forest carbon projects fail to provide climate, environment, development  or financial gains. The organisations call on the EU and Member States to stop funding carbon offset projects, including REDD+ projects.

Carbon Discredited: Why the EU should steer clear of forest carbon offsets

The N’hambita Forest Carbon Offset Pilot Project, run by the company Envirotrade, and initially funded by European Commission (EC) money, has failed to deliver most of its climate change, development, financial and learning objectives. Envirotrade suggest that emissions have been offset against supposed carbon stores in Mozambique, which they cannot calculate because of the problems inherent in baselines and the impossibility of verifying claimed savings. 

PDF iconNhambita_internet.pdf773.13 KB

EU ETS manipulates State Aid Rules: UK uses public money to subsidise polluters

Released on 3 June 2013, the day energy intensive industries in the United Kingdom (UK) may apply for subsidies of up to Euro 295 million to offset any increase in energy prices as a result of the European Union Emissions Trading Scheme (EU ETS), this press release launches FERN's new briefing "Subsidising climate change" which puts these subsidies into a context of low carbon prices and historic windfall profits for industry from the EU ETS.

PDF iconState Aid Press Release_Final.pdf319.53 KB

Subsidising Climate Change: How industry uses the EU ETS to manipulate State Aid rules for their own profit

This short briefing looking at how State Aid is being used to offset the indirect costs of the EU Emissions Trading Scheme (EU ETS). The Commission is attempting to remedy the low price of carbon, but State Aid guidelines mean that Member States can use public money to cushion any increase in price that is achieved. The briefing concludes that price-driven tools will never be strong enough to shift the EU out of fossil fuel and into sustainable renewable energy.

Europe cannot drill its way to a low-carbon economy, say climate justice groups

This press release warns that EU leaders' discussions about how to lower energy prices and ‘improve’ European industrial competitiveness must not be a smoke-screen for furthering fossil fuel extraction including shale gas.

PDF iconPR_May22_EnergySummit.pdf20.03 KB