Tisha’s Insights

Clearing the Air on Carbon Offsets

June 22, 2023 Tisha Schuller & Kelsey Grant

What you’ll learn below:

  • Why companies include carbon offsets in their decarbonization strategies
  • Where you can go for credible resources on offsets
  • How to de-risk and ensure legitimacy for your carbon offset strategy


Leaders both within and outside of the oil and gas industry are keenly aware of the controversial reputation of carbon offsets, which have been capturing major negative headlines in recent months. John Oliver dedicated an entire episode of Last Week Tonight in August to discussing how carbon offsets fail to deliver on reducing emissions. The episode ended with the launch of “Oliver’s Offsets,” a real website for a fake offset registry. (The episode is actually an excellent, snarky, laugh-out-loud funny primer on the many issues offsets face. No one—not The Nature Conservancy nor Kit Kat bars—is left unscathed.)

Despite Oliver’s satire, companies—for good reasons—do engage in offset strategies. In today’s Both True, I’ll cover what you need to know about making your strategy resilient to credible critiques.

Both of these things are true:

  • Carbon offsets can be a useful component of a company’s decarbonization strategy.
  • If done poorly, carbon offsets can undermine the efficacy and integrity of a company’s decarbonization efforts and leadership. 

The situation

With critiques like John Oliver’s out there, why in the world would an oil and gas company engage in the carbon offset market? There are four broad (and not mutually exclusive) reasons:

  1. Meeting short-term goals. Your company might seek to meet its emissions reduction goals with offsets when (1) long-term, capital-intensive investments are not practical or (2) meeting targets is not feasible with currently available technology. For example, Shell states that it uses various carbon offsets, including reforestation and renewable energy offset projects, “as one of many solutions to decarbonization” to “compensate” for emissions that remain unavoidable after other avoidance and reduction efforts.
  2. Creating a source of capital. Your company might leverage offsets as a financial instrument to generate capital from existing business practices or projects outside its core business. In some instances, a company may reduce emissions from its own operations and generate credits to sell to others, invest in or own a carbon offset project, or invest in or own carbon offset-related companies. In 2020, for example, bp acquired a majority stake in Finite Carbon, the largest developer of forestry offsets in the U.S.
  3. Generating public goodwill. Many carbon offset projects can be intriguing to company leadership and stakeholders. A company might support carbon offset projects that provide social and environmental benefits, in additionto their own in-house emissions reductions. For example, Shell is involved with a coast conservation project that, in addition to preventing deforestation, improves disaster risk reduction for local communities and supports the development of the coastal area into a “eco-tourism hub.”
  4. Addressing regulatory obligations. Your company might fund or purchase carbon offsets to comply with emissions cap or reduction requirements. For example, California allows certain entities to use eligible offset credits to satisfy a portion of their compliance obligation under the state’s Cap-and-Trade Program.

At Adamantine, we monitor developments in the world of carbon offsets because—while offsets will be useful when well done—they are also very reputationally risky.  Here’s the essential context you need to know:

  • Market growth. Since 2017, there has been a 252-percent increase in carbon credit retirements. And, in December 2022, 45.8 million carbon credits were issued, the highest monthly issuances on record. Morgan Stanley estimates the voluntary carbon offset market will grow from $2 billion in 2020 to around $250 billion by 2050.
  • Standard setting. At the heart of the carbon offset debate is the quality of the offset. For years, standard-setting organizations have worked—and continue to work—toward defining and providing frameworks that define a high-quality carbon offset. The goal is to confirm that a given offset, which meets the standard, has the emission impact it claims and does not result in other social or environmental harms. Prominent standard-setting players in the space include the Integrity Council for the Voluntary Carbon Market (Integrity Council), Gold Standard, and Verified Carbon Standard (Verra).
  • The government’s hand. Federal policies and regulator priorities are shaping the carbon offset market, and myriad federal agencies are entering the conversation. The Infrastructure Investment and Jobs Act and Inflation Reduction Act made historic investments in offset-adjacent technologies, such as CCS and DAC. The Commodity Futures Trading Commission is actively considering what role it should play in regulating voluntary carbon markets. The Securities and Exchange Commission’s proposed climate disclosure rule would require a company to “disclose the role that carbon offsets…play in a registrant’s climate-related business strategy.” In addition, the Federal Trade Commission’s Green Guides, which outline principles that apply to environmental marketing claims, advises sellers of offsets to “employ competent and reliable scientific and accounting methods to properly quantify claimed emission reductions and to ensure that they do not sell the same reduction more than one time.”
  • Backlash. Carbon offsets have repeatedly been the target of fierce criticism. Critics say carbon offsets enable greenwashing by allowing companies to continue polluting. Some observers disparage the efficacy of offsets altogether, citing inadequate methodologies, emission accounting methods, and standards. For example, in January, The Guardian released a well-circulated study claiming that over 90% of rainforest carbon credits issued by Verra did not reflect real emission reductions.

Seize the day

At Adamantine, we don’t see carbon offsets as central to a company’s sustainability and decarbonization strategy. However, when done well, they can support your company’s emission reduction goals and allow you to leverage existing assets and business competencies. Here are steps you can take to de-risk and bring legitimacy to your carbon offset strategy:

  • Articulate the why. It is important that your company can articulate, both internally and externally, why a carbon offset is a solution for you and how it fits into your sustainability strategy. You should be able to answer the following questions: Which emissions (Scope 1, 2, or 3) will carbon credits be used to offset? Will carbon credits be used to meet short-, medium-, or long-term emission reduction goals? Does the carbon offset represent emissions that could not be reduced via other means? How much of your emission reduction goals will be met with carbon credits?
  • Identify your role. A company can engage in the voluntary carbon offset market in several ways.  A company can directly purchase carbon credits to offset its own emissions, invest in a carbon offset project that is being developed, provide carbon credits to other emitters by being a carbon offset project developer, provide a carbon offset program to customers, and more. The role your company is best suited to play will depend on the resources your company and internal teams can dedicate, your timeframe for purchasing or selling offsets, your company’s existing investments and assets, and more.
  • Eschew low-quality (and high-risk) offsets. When selecting a carbon offset, companies should only utilize high-quality carbon offsets that are effective and reliable. The higher the quality, the lower the risk. Companies can engage with reliable partners and only participate in reputable carbon offset programs, which use robust standards and procedures for vetting and verifying projects. To understand what makes a high-quality carbon credit, the Integrity Council’s Core Carbon Principles provide a benchmark. While organizations continue to evaluate, update, and improve standards and methodologies for vetting offsets, the Integrity Council’s principles, which are informed by multi-stakeholder feedback and are considered among the most reputable guides today, are a good place to start.
  • Consider as a supplemental tool. Carbon offsets are the most impactful—and less prone to controversy—when used as a supplemental tool that complements other decarbonization tactics. Carbon offsets can be a cost-effective way for a company to meet their GHG reduction goals when other emission reduction activities are inefficient, infeasible, or too costly. But if they are the backbone to your emission-reduction strategy, you can expect skepticism from stakeholders.
  • Don’t forget environmental justice (EJ). EJ has become increasingly central to how companies will plan, develop, and operate projects, in addition to how they implement their decarbonization strategies. The selection of a carbon offset should complement an honest and transparent effort to meaningfully engage EJ communities located near a carbon offset project. To engage them as partners and co-create mutually beneficial outcomes, it is vital a company understands the full history and interests of a community and how a carbon offset project could potentially impact that community.

Thank you to Kelsey Grant for her writing contributions to this piece. Are you considering how carbon offsets fit into your decarbonization strategy? Want to avoid the controversies and pitfalls often surrounding carbon offsets? Reach out—Adamantine can help you devise a strategy around carbon offset use and identify potential partners and pathways for executing your offset strategy. If this post was forwarded to you, please take a moment and subscribe here.

To clear air,



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Both of These Things Are True

By Tisha Schuller