NOTES
Keeping Offsets Honest
JONATHAN GERSTELL*
ABSTRACT
The promise of carbon offsets is that we can fight climate change without
having to make painful sacrifices. But carbon offsets are broken. Billions of dol-
lars are spent annually to achieve emissions reductions that have been repeat-
edly shown to be wildly exaggerated if not outright fictitious. Meanwhile, rich
countries continue to emit billions of tons of CO
2
and other greenhouse gases
into the atmosphere every year. Government regulation is urgently needed but
will not, on its own, suffice to adequately police the carbon offset market.
This Note is the first scholarly analysis to consider how citizen-led litigation
can and must play a role in holding the buyers, sellers, and brokers of carbon
offsets accountable. The Note surveys a variety of laws that may be implicated
in offset litigation—from state and federal environmental laws, to unfair com-
petition and securities regulation, to contract law. Previous scholarship has
examined problems in the administrative regulation of offsets. Such regulation
is indeed needed, but private citizens have a powerful and necessary role to
play too. Citizen oversight is critically needed because we have no hope of
meeting the challenge of climate change without getting carbon offsets right.
TABLE OF CONTENTS
I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
II. Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239
A. What are Offsets? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239
B. The Need for Offsets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
C. Carbon Offset Players . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244
D. Challenges and Best Practices in Offset Governance . . . . . . . . . . . 245
* J.D., Georgetown University Law Center, 2023. The author thanks Professor William W. Buzbee
for helping him develop the ideas behind this Note and for providing feedback, and the students of the
Fall 2022 Georgetown Law Environmental Research Workshop for their insightful comments on earlier
drafts. The author also thanks all the editors and staff members on the Georgetown Environmental Law
Review for their outstanding work in preparing this Note for publication. Finally, the author thanks
Elisabeth for her unending support. © 2024, Jonathan Gerstell.
233
III. Citizen Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249
B. Other Citizen Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251
C. Citizen Enforcement Under NEPA . . . . . . . . . . . . . . . . . . . . . . . . 253
IV. Fraud and Unfair Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258
A. FTC Act and State Unfair Competition Statutes. . . . . . . . . . . . . . . 258
B. Securities Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259
C. Commodity Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262
V. Contract Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264
A. Breach of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264
B. Third Party Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266
VI. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268
I. INTRODUCTION
In 2008, a project co-funded by the Clinton Foundation and the Cambodian
government came up with a novel idea to protect the forests of Cambodia. The
project would sell carbon offsets—credits representing the reduction or preven-
tion of greenhouse gas emissions—to such prominent corporations as Virgin
Airlines. The money from these offsets would then fund efforts to prevent defor-
estation. It seemed like a win-win—companies could claim credit for reducing
their carbon footprints, and Cambodian trees would receive needed protection.
Ultimately, the project sold 48,000 offset credits. But the promise did not match
reality. By 2017, just nine years after the project’s launch, the amount of forested
land in the protected area had declined by almost half. In one protected area that
was previously 90% forested, no forest remained at all.
1
Lisa Song & Paula Moura, An Even More Inconvenient Truth: Why Carbon Credits for Forest
Preservation May Be Worse Than Nothing, PROPUBLICA (May 22, 2019), https://perma.cc/U55S-XN8D.
* * * *
California operates a cap-and-trade system to reduce the state’s greenhouse
gas emissions. Under this program, polluters can stay below their state-set emis-
sions cap by offsetting some of their emissions through purchasing credits from
forestry projects. To ensure that these credits reduce emissions in the long term,
10–20% of the credits go toward a “buffer pool” of extra land that is conserved as
a kind of insurance against forest loss. This buffer pool was supposed to protect
against tree loss from the next 100 years of wildfires. But by the summer of 2022,
95% of the land set aside to protect against wildfires had burned down.
2
Camilla Hodgson, Wildfires Destroy Almost All Forest Carbon Offsets in 100-Year Reserve, Study
Says, FINANCIAL TIMES (Aug. 5, 2022), https://perma.cc/83WN-LXEZ.
* * * *
In 2007, a lumber company purchased a large tract of woodland in Tennessee.
The company then sold an easement, which prohibited it from harvesting timber
on the property, to the Tennessee state government. A few years later, the
1.
2.
234 THE GEORGETOWN ENVTL. LAW REVIEW [Vol. 36:233
company profited off the same land again by selling 20,000 carbon offset credits
to the Chevron Corporation. The oil giant was thus able to claim an emissions
reduction worth 20,000 metric tons of carbon dioxide even though the trees that
the company was purportedly paying to protect could not have been cut down
regardless. Chevron’s claimed emissions reductions were thus “fictitious.”
3
Ben Elgin, This Timber Company Sold Millions of Dollars of Useless Carbon Offsets, BLOOMBERG
(Mar. 17, 2022), https://perma.cc/HY8Z-CWB5.
* * * *
These are a few examples of carbon offsets going wrong. They are far from alone.
A carbon offset is a credit representing a reduction or avoidance in greenhouse
gas (GHG) emissions, used to “offset” the emissions from some other activity.
4
JONATHAN L. RAMSEUR, CONG. RSCH. SERV., A BRIEF COMPARISON OF TWO CLIMATE CHANGE
MITIGATION APPROACHES: CAP-AND-TRADE AND CARBON TAX (OR FEE) (2021), https://perma.cc/57SX-
Y37T. For a more thorough definition, see Part II.A infra.
For instance, an individual can easily go online to purchase offsets for their air-
line emissions, theoretically allowing them to travel guilt-free.
5
See Flight Carbon Offset, TERRAPASS, https://perma.cc/5HD9-CRCP (last visited Feb. 5, 2023).
The pop superstar Taylor Swift has recently attracted some controversy for using carbon offsets to
counteract the impact of her private jet travel. Lola Mendez, Taylor Swift Claims She Offsets Her Travel
Carbon Footprint – How Does That Work?, BBC (Feb. 3, 2024), https://www.bbc.com/travel/article/
20240213-taylor-swift-private-jet-flight-travel-carbon-footprint.
6. Tori Timmons, All I Want for Christmas is a Carbon Sink, 72 HASTINGS L.J. 1347, 1369 (2021).
7.
Offsets often
involve paying to preserve woodlands from deforestation, on the theory that trees
are natural “carbon sinks” that absorb carbon dioxide (CO
2
) from the atmos-
phere.
6
Offsets hold out the promise of creating a net-zero emissions world with-
out the need for painful sacrifices—one in which all new GHG emissions will be
counterbalanced by reductions in emissions elsewhere.
An increasing number of governments and corporations have pledged to reach
net-zero carbon emissions. More than 140 countries have announced net-zero
targets, including the three largest polluters—China, the United States, and the
European Union.
7
For a Livable Climate: Net-zero Commitments Must Be Backed by Credible Action, UNITED
NATIONS, https://perma.cc/W898-TRJ6 (last visited Feb. 5, 2023).
So have a fifth of the world’s 2,000 largest companies, with
collective revenue totaling nearly $14 trillion.
8
Disha Shetty, A Fifth Of World’s Largest Companies Committed To Net Zero Target, FORBES
(Mar. 24, 2021, 9:30 AM), https://perma.cc/PR2U-HHTP.
This list includes oil companies
BP
9
Getting to Net Zero: Climate Advocacy in the US, BP, https://perma.cc/AN2F-6SJ9 (last visited
Feb. 5, 2023).
and Shell.
10
Our Climate Target, SHELL, https://perma.cc/M8KK-GD7H (last visited Feb. 5, 2023).
Offsets form an integral part of many of these net-zero plans.
11
For instance, Shell plans to spend $450 million on carbon offsets in the coming years. Alex
Lawson & Patrick Greenfield, Shell to Spend $450M on Carbon Offsetting as Fears Grow that Offsets
May Be Worthless, THE GUARDIAN (Jan. 19, 2023, 6:09 AM), https://perma.cc/5YD6-D4Z2.
To achieve a net-zero world and avoid the most calamitous impacts of climate
change, offsets need to work.
3.
4.
5.
8.
9.
10.
11.
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