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"Offsetting Emissions Is Part of Sustainability Work" – How to Avoid the Pitfalls of Carbon Markets

20.5.2025 Carbon Accounting Newsletter Offsetting

Offsetting emissions is a way to take responsibility for emissions that have not yet been reduced or cannot be avoided. Carbon markets are imperfect but still effective tools to reduce the burden on the atmosphere.

“A responsible actor identifies their emissions, sets ambitious climate targets, reduces emissions rapidly, and fully offsets the remaining share—even during the transition period,” states Finnwatch climate expert Lasse Leipola.

The basic idea of carbon markets is simple: the atmosphere is shared, so one ton of emissions can be offset by removing one ton elsewhere. Offsetting occurs by purchasing climate units on voluntary carbon markets. Emissions offsetting is not greenwashing—if the actor is reducing their own emissions, selecting high-quality projects, and communicating transparently. For example, the Finnish government’s Guide to Best Practices for Voluntary Carbon Markets (2023) and the ISO 14068 standard provide guidance on how to communicate claims accurately, openly, and clearly.

Carbon Markets Are in Transformation

Due to a new EU directive targeting greenwashing (which is otherwise important), actors are losing the right to use product-specific offsetting claims such as “carbon neutral” or “emissions offset.” In the future, offsetting claims may only refer to organization-wide climate action. This upcoming product-level ban is expected to reduce companies’ interest in voluntary climate efforts and increase global emissions, according to the VIKKE Report (2024), which examined carbon market developments and their implications for Finland.

Instead of offsetting claims, companies can use climate contribution claims. In that case, the actor does not claim to have neutralized its own emissions, but rather to have contributed to achieving the national or global 1.5-degree target by purchasing carbon units. According to the report, it’s likely that climate contribution and organization-level offsetting claims will become more common, as will net-zero commitments.

“There are many issues with climate contribution claims—for instance, how emissions and carbon units correspond when offsetting claims cannot be made. Is it fair for a company to say it’s supporting Finland’s climate goals if its value chain emissions are burdening India?” Leipola asks.

Still, we shouldn’t be alarmed by the turbulence in the carbon markets. With expert help, it’s possible to find the right terminology to communicate about one’s climate action. According to Finnwatch, regardless of claim regulation, all actors must take responsibility: every ton emitted must be removed from the atmosphere in one way or another. What matters for the climate is the actual action—and its quality.

A Good-Enough Project Is Enough

Offsetting emissions requires financing climate action through carbon markets that wouldn’t happen otherwise. The best way to avoid the quality pitfalls of carbon markets is to choose projects with reliable certifications like Gold Standard and Puro.earth. A good project is typically pre-implemented, properly certified, and third-party verified.

“Don’t let perfect be the enemy of good. We encourage actors to take responsibility for their emissions and improve the market by demanding quality,” says Leipola.

When selecting a project, make sure the climate impact is credible and that it doesn’t violate human rights or cause environmental harm. The Carbon Credit Quality Initiative helps assess country- and project-specific risks. Many projects require large land areas, which increases the risk of environmental damage and land-use conflicts. However, implementation quality is the biggest factor in reducing risks. Buyers are encouraged to seek expert help if needed when selecting a project.

Double Counting Directs to Climate Support

When selecting a project, attention must also be paid to double counting. For example, the carbon sequestration from domestic forest projects is counted both as a climate action of the Finnish state and of the purchaser of the climate unit. Projects subject to double counting cannot be used for emission offsetting; their funding constitutes climate support. According to Finnwatch, offsetting is the most ambitious—and therefore the primary—way to take responsibility for emissions.

The challenge of double counting is global, as all countries now have their own climate targets. Double counting can be avoided in two ways. The buyer of climate units can choose a project that is outside the host country’s target—for example, one that increases forest carbon sequestration in a country without a national target for carbon sinks. Another option is to choose a project for which it has been agreed that the climate benefit will not be counted toward the host country’s target. Whether a project involves double counting must be checked separately, for example in the registry of the certification system used, such as Gold Standard, or from the intermediary selling the climate unit.

The carbon market offers good nature-based projects also for emission offsetting, but some experts consider technical projects more reliable in terms of permanence and side effects. For example, ClimeWorks in Iceland removes carbon directly from the air and stores it geologically, making it an exceptionally safe option. Carbon sequestration in biochar projects is also nearly permanent, and Finnish projects are not included in national accounting, at least for now. For example, Carbofex Oy from Nokia is a pioneer in the field—it was the first biochar producer to receive the Puro.earth certificate and is one of the largest biochar operators in Europe.