ANNUALRREVIEWSAnnual Review of Environment and ResourcesAre Carbon Offsets Fixable?Joseph Romm,Stephen Lezak,2.3 and Amna AlshamsitCenter for Science,Sustainability,and the Media,University of Pennsylvania,Philadelphia,Pennsylvania,USA;email:rommj@sas.upenn.edu2Berkeley Carbon Trading Project,Goldman School of Public Policy,University of California,3Smith School of Enterprise and the Environment,University ofOxford,Oxford,UnitedKingdom4School of Global Studies,University of Sussex,Brighton,United KingdomAnnu.Rev.Environ.Resour.2025.50:649-80Keywordsonline at environ.annualreviews.orgcarbon offsets,net zero,climate neutral,additionality,Paris Agreement,corresponding adjustment,mitigation contributionhttps://doi.org/10.1146/annurev-environ-112823-064813Abstractlicensed under a Creative Commons Attribution 4.0This article provides a systematic review of the literature on carbon offsets.Intemational License,which permits unrestrictedA growing number of studies have found that the most widely used offsetuse,distribution,and reproduction in any medium,programs continue to greatly overestimate their probable climate impactprovided the original author and source are credited.often by a factor of five to ten or more.Credit quality has remained a prob-See credit lines of images or other third-partymaterial in this article for license information.lem since the inception of carbon credits,despite repeated efforts to addressthe core challenges of additionality,leakage,double counting,environmen-OPENACCESS©mtal injustice,verification,and permanence.Combined,these issues have ledmany to conclude that overcrediting in carbon offsets is an intractable prob-lem.These challenges helped stall the rapid growth in the voluntary carbonmarket(VCM)earlier this decade.They warrant renewed focus in the wakeof COP29,where 200 nations significantly advanced the effort begun with器CONNECTthe Paris Agreement to create the rules governing a global compliance mar-ket for carbon credits.But COP29 did not substantially address the qualityproblem,creating the risk the Paris compliance market will be rife with·Download figuresovercrediting and other problems-and that the VCM could undermineNavigate cited referencesthe Paris market.We recommend that all stakeholders begin focusing onExplore related articleshigh-integrity,durable carbon dioxide removal and storage,while recog-Share via email or social medianizing that the recent literature has raised the question of whether durablemeans 100 years,1,000 years,or longer.Ultimately,we find that many of themost popular offset project types feature intractable quality problems.Weshould focus on creating rules to find and fund the relatively few types of649high-quality projects while employing alternative finance and strategies such as contributionclaims for the critical projects in conservation,renewable energy,and sustainable development.Contents1.NTRODUCTION.…6502.BACKGROUND.…6522.1.The Clean Development Mechanism.......................................6532.2.Joint Implementation.……6532.3.Other Compliance Programs .............................................6542.4.The Voluntary Carbon Market.............................................6543.THE UNDERLYING REASONS FOR POOR QUALITY.....................6553.1.The Overcrediting Problem...............................................6553.2.Additionality,Counterfactuals,Imperfect Information,and Gameability......6563.3.Leakage…6573.4.Permanence,Carbon Dioxide Removal,and Monitoring....................6583.5.The Persistent Demand for Low-Quality Credits...........................6594.OFFSET USE,DOUBLE COUNTING,AND PARIS.........................6604.1.Do Offsets Incentivize Direct Emissions Reductions?.......................6604.2.The Double Counting Problem and Solution...............................6614.3.Implications of Corresponding Adjustments for Paris.......................6614.4.Implications of Corresponding Adjustments for the Voluntaryarbon Market...........................................................6625.ENVIRONMENTAL JUSTICE AND COBENEFITS.........................6635.1.Cobenefits in Practice.....................................................6635.2.Safeguards.…6645.3.Local Sovereignty and Tenure.............................................6655.4.A Way Forward.…6656.CURRENT EVOLUTION AND TRENDS...................................6666.1.Causes ofthe Market Contraction..........................................6666.2.Market Responses and Innovations.........................................6666.3.Recent Developments on Article 6.........................................6677.CONCLUSION.................6681.INTRODUCTIONCarbon offsets are projects that generate credits meant to represent the reduction,avoidance,orremoval of greenhouse gas(GHG)emissions from the atmosphere(1).These credits,generatedfrom a project in one place,are generally purchased to compensate for emissions in another place.In a typical transaction,a developed country or company claims to negate some or all of its ownheat-trapping GHG emissions by paying a developing country,or an entity in that country,toundertake projects that generate an equivalent number of credits,which are then claimed againstthe buyer's GHG inventory.In principle,each carbon credit should correspond to one metric ton of carbon dioxide equiv-alent(COze)-that is,any combination of GHGs with a global warming potential equal to that