When Carbon Offsetting is a Scam

Carbon offsetting is becoming an increasingly popular practice among Americans as we work to become more environmentally aware and practice greener living. The average American emits about 20 tons of carbon into the atmosphere each year and although we all make attempts to reduce our carbon footprint, most of the time it is not enough to make a substantial difference.

We now have the option to send money to funds designated to reduce carbon emissions somewhere else to balance out our own emissions locally. This sounds like a good idea in theory and in many cases, the projects are legitimate. The primary problem is that there is no central authority overseeing the offsetting practices and many of the projects and brokers who collect the funding from consumers across the country are frauds.

RainforestPhoto: Shao

The most common fraudulent practice is double selling. What happens with double selling is that a wind power generating company will sell offset credits to one person and then resell them to another person. This way, they collect twice as much money. And, more than likely, there are more than two people purchasing the same credits.

Another common practice is claiming offsets that are not really offsets. What this means is that a reduction in emissions that would have happened regardless is marketed as a green offsets investment. An example would be an industrial plant reducing the amount of evening hours it is open to reduce power usage in an attempt to reduce expenditures. They cannot call this reduction in usage an offset and sell it, because they were going to reduce their power consumption regardless.

The Federal Trade Commission is working hard to protect consumers and ensure that carbon offsetting is a legitimate practice that is truly helping the environment and not simply lining some rich investor’s pockets.