Offsets discredited… yet again

When the companies responsible for the most egregious pollution are portrayed as being leaders in climate action, it is critical to take a closer look. An industry report attempted to make that very argument. It claimed that several major oil, airline, and automobile companies that buy the largest number of carbon credits, such as Delta Air Lines, Inc., TotalEnergies, and Shell, are ‘climate leaders’. However, upon further inspection, that conclusion is quickly discredited.  

This article follows a recent publication by SOMO and Data Desk, for which we dived deep into the data analysis of two industry-driven reports that argue that companies that use carbon credits are likely to decarbonise their operations further and faster than the companies that do not. Our analysis shows that this conclusion is not backed up by the data they used. And this matters because both reports have been widely disseminated, creating false perceptions of what the offset industry actually does: divert attention from the continued extraction and consumption of fossil fuels. 

Ecosystem Marketplace (EM) based the analysis in its All in on Climate(opens in new window) report on only two years of data (2020-2021). In the report, EM identified the biggest buyers of carbon credits at the time and concluded that these companies are leading climate action.

Equating the companies that are driving the crisis with ‘leaders’ of climate action is dangerous and irresponsible. These companies are clearly not climate leaders. Not only are most of them driving the climate crisis by expanding their extraction and consumption of fossil fuels, but most of the offset projects that are behind the carbon credits bought by these companies have been linked to controversies related to flaws in the methodologies, as well as land-grabbing practices and human rights violations. 

How then, can these companies claim to be advancing towards climate neutrality? This article takes a closer look at the climate leadership failure of the top three multinationals identified by EM.

1. Delta Air Lines

The EM report identifies airline company Delta Air Lines (Delta) as – by far – the world’s largest purchaser of carbon credits in 2021. In that year, it purchased almost 27 million credits, or 22 per cent of all credits by volume, amongst the 768 carbon credit buyers analysed in the report. According to Delta’s 2021 ESG Report(opens in new window) , this amount is equivalent to almost 100 per cent of the company’s total emissions for that year (27,160,518 million tonnes). Far from using carbon credits “to offset hard-to-abate emissions ₁ ” as the EM report claims, Delta was doing the opposite by offsetting almost all of its emissions. This allowed Delta, following the carbon offset logic, to claim ‘carbon neutrality’. 

This should not be a surprise. In 2020, the airline announced(opens in new window) in a highly publicised campaign that it was going to invest one billion dollars over ten years to mitigate its emissions and become the “world’s first carbon-neutral airline”. 

Delta’s ‘carbon neutral’ campaign enabled(opens in new window) the firm to gain market share and charge higher prices. A 2021 investigation(opens in new window) , however, exposed how top airlines, including Delta, were allegedly relying on ‘phantom credits’; credits that do not represent emissions reduced or avoided by the offset project. At the time, Delta stated(opens in new window) that its credits came from projects which had followed the “rigorous methodologies” of the standard-setting body Verra. Yet, an abundance of research keeps questioning the validity of those same methodologies. Over the years, Delta has purchased carbon credits from a range of projects around the world. Several reports of projects from which Delta has obtained its credits expose allegations of methodological flaws, such as the project in Pirá Paraná(opens in new window) , Colombia, as well as allegations of rights abuses, such as the Cardamom project in Cambodia(opens in new window) or the Katingan project in Indonesia(opens in new window) . Two projects even lost rulings at national court cases in Colombia and Peru. In March 2022, Delta walked back(opens in new window) from this plan and shut down its offset programme. 

Nevertheless, the use of offset credits continues to play a crucial role in the company’s climate strategy via the offsetting scheme of the International Civil Aviation Organization. Delta’s 2023 ESG report(opens in new window) shows that by 2050, an estimated seven per cent of the company’s net-zero target will be based on carbon offsetting. SOMO did not receive an answer from the airline when asked about the changes between the 2022 halting of Delta’s carbon offsets programme and its current and future plans for carbon credits use.

In May 2023, four months before the release of the EM report, a class action lawsuit(opens in new window) was initiated against Delta over alleged false and misleading ‘neutrality’ claims. The complaint states(opens in new window) that Delta’s reliance on offsets, which could not guarantee to counteract the flights’ pollution, misled customers into purchasing flights at a premium. The company filed a partial motion to dismiss the case, asserting it “lacks legal merit(opens in new window) ”, but the court denied it in December 2024, and the lawsuit is ongoing(opens in new window) . 

In 2024, watchdog organisation Corporate Accountability exposed(opens in new window) how just over 35 per cent of the 41 million carbon credits purchased by Delta were from 11 offset projects identified as likely “worthless”, meaning that they cannot guarantee additional and permanent reductions, they overestimate its reductions, or that emissions are just shifted elsewhere. 

Another significant omission in EM’s report is that Delta’s baseline year for its emission reduction commitments was set as 2019. In 2020 and 2021, which is the time period for EM’s analysis, the COVID-19 pandemic severely affected air travel. By 2023, however, Delta reported(opens in new window) an increase in its greenhouse gas emissions, which were above the level of its pre-pandemic 2019 baseline. The EM report makes no mention of Covid-19 as a possible factor in the company’s emission reductions in the period covered by the report, nor did EM answer SOMO’s inquiry about this.

This polluting pattern is representative of the entire aviation industry as air travel is one of the most carbon-intensive activities. Demand is rebounding(opens in new window) quickly to pre-pandemic levels, as more people are flying and more cargo is transported by airplanes. Between 1990 and 2019, both passenger and freight demand have approximately quadrupled. Almost every major airline has an offsets-based programme, but almost none has shown any progress in actually decarbonising – nor are the incentives set up for flying less.

2. TotalEnergies

The second largest buyer of carbon credits in EM’s report is TotalEnergies (Total). The French oil company claims it aims to achieve a net emissions reduction of 40 per cent by 2030 and full climate neutrality by 2050. Notably, Total states(opens in new window) that to reach these goals, it will begin offsetting its emissions only in 2030, gradually increasing its use of carbon credits up to 2050. This means that the company is stockpiling the credits for future use. While some companies stockpile credits in the hope that their price will increase in the future, this is an extremely risky strategy, as we explain below. 

Total’s submission(opens in new window) to the Carbon Disclosure Project (CDP) for 2021 shows that by the end of that year, “[the company’s] stock stood a little under 7 million certified credits.” Since then, Total’s stockpiling has increased. In its 2024 Sustainability and Climate report(opens in new window) , the company reported that by the end of 2023, “[the company’s] stock of credits stood at just under 11 million” and its “accumulated credits expected to total 44 million in 2030 and 71 million in 2050”. If this plan is accomplished, then Total plans to use around 5 million credits per year from 2030 onwards, which represent five million tonnes of emissions. To put these numbers in perspective: the oil company’s emissions for 2023 alone amounted(opens in new window) to 390 million tonnes.

The company plans(opens in new window) to invest up to USD 100m per year on average in offset projects between 2020 and 2030. A significant risk in Total’s stockpile strategy is that the projects from which it is buying the credits and the companies running them are likely to confront challenges, be suspended, or even disappear between 2020 and 2050. Some of these projects have already confronted serious criticism, as described below. When SOMO asked Total about this concern, the company responded that it is focusing on reducing emissions as much as possible while building up a “high-quality portfolio” of offset credits. The company claims to be “paying close attention to the integrity and permanence” of the offset projects it buys from, insisting that its credits come from projects certified by the “highest standards of environmental and social management” and that these offset activities aim to contribute to “social, economic and environmental benefits for local communities”. ₂

These claims, however, lack credibility when contrasted with the numerous investigations reporting on serious problems with the offset projects that Total has contributed to establishing, as well as those from which it has bought credits. In 2019, for example, the company acquired(opens in new window) a controversial new oil exploration permit in a highly forested part of the Republic of Congo. The company then announced(opens in new window) plans to plant 40,000 hectares of trees in a nearby area to generate carbon credits. In 2022, however, an investigation found(opens in new window) that the project had allegedly taken away farmers’ land and threatened their livelihoods by imposing restrictions to access their forests. At the time, Total stated(opens in new window) that it had to still finalise “the mapping of stakeholders and to propose and implement the measures that will allow them to be co-beneficiaries of the project.” Yet, trees had already(opens in new window) been planted. The project is still under validation(opens in new window) by the standard-setting body Verra, which means that it has not generated any credits yet. Other reports related to projects from which Total has obtained its credits show allegations of methodological flaws, such as the Kariba project in Zimbabwe(opens in new window) , as well as rights abuses, such as the forest-offset programme in Suriname(opens in new window) and the Madre de Dios project in Peru(opens in new window) . The Cordillera Azul project recently lost a court ruling in Peru due to its lack of free, prior, and informed consent of Indigenous Peoples. Together, Total and Shell have bought almost 90 per cent of the carbon offsets sold from the Cordillera Azul project, which has systematically documented(opens in new window) the project’s violations.

Investing USD 100m a year in stockpiling carbon credits, however, is buying Total the positive image for investors keen on seeing companies offset their emissions while protecting them from any bad publicity by not using any of the credits now. 

At the same time, in 2022, Total was brought to court(opens in new window) in France over its reportedly misleading ‘climate neutrality’ promises to consumers. The procedures were deemed admissible(opens in new window) by the court in 2024. In 2023, another court in Germany ruled(opens in new window) against Total for allegedly misleading consumers with its “CO₂ compensated heating oil”. 

The offset industry distracts attention from the most significant harmful impact of this company on the climate: its ongoing extraction of fossil fuels. Total’s own reports(opens in new window) and data(opens in new window) show the company’s intention of substantially investing in hydrocarbons in the coming years. By 2030, Total will double(opens in new window) its gas power production compared to 2023 levels, and the company has set a target(opens in new window) of increasing its oil and gas production by two or three per cent per year until 2028. Total’s stockpile of carbon credits would be used up in no time if its current emission levels keep rising.

And this expansion not only accelerates the climate crisis. Among Total’s main fossil fuel projects that are yet to enter production is the LNG operation in Cabo Delgado, Mozambique, which has been described as a “mega-carbon bomb(opens in new window) ” and has contributed(opens in new window) to the emergence of a social crisis with communities facing violence, displacement, and human rights abuses. Another carbon bomb is the East African Crude Oil Pipeline (EACOP), which plans to start extraction this year and is expected to be the world’s longest heated crude oil pipeline. The pipeline impacts territories in Uganda(opens in new window) and Tanzania(opens in new window) and has met fierce opposition due to its local social(opens in new window) and environmental(opens in new window) impacts. 

Total’s climate strategy of seeking to offset its increasing investment in fossil fuels with tens of millions of dubious and controversial carbon credits is a recipe for increased emissions globally and a clear indication of why Total is a climate failure.

3. Shell

The third top carbon credit buyer in EM’s report is fossil fuel company Shell, which is among the top ten polluters(opens in new window) of fossil fuel and cement producers. 

Shell has set a target(opens in new window) to reach net-zero emissions by 2050, covering scope 1 and 2 emissions, and a “net carbon intensity” target for scope 3 emissions. ₃ The difference between reducing carbon intensity as opposed to absolute reductions is important. It refers to an increase in efficiency in the production that would lead to fewer emissions for a specific unit, but not an overall reduction of emissions. For example, while Shell can aim to produce each barrel of oil cleaner, there is no limit on the total amount of barrels the company will produce. This could, in fact, increase the amount of overall emissions.

In 2021, Shell announced(opens in new window) that it would offset emissions of around 120 million tonnes a year by 2030, and it used(opens in new window) 6 million carbon credits that year, the majority of which were for scope 3 emissions. This scope relates to the fuel and products Shell sells, which is where the vast majority of the company’s emissions are.  

These credits were mostly part of Shell’s ‘Drive Carbon Neutral’ campaign(opens in new window) , which was launched in 2021 for customers to have the option to pay a few extra cents when fuelling their cars and, according to Shell, compensate for the emissions generated by the vehicles they use. The offer was available(opens in new window) to fleet customers in 17 countries and to retail customers at stations in Austria, Canada, Germany, Hungary, the Netherlands, Switzerland, and the UK. Shell’s 2021 guidelines for “ensuring high quality credits” state that projects must guarantee that “free, prior, and informed consent is properly carried out before project activities start” and that “all members of the local community have been involved in decision-making processes for benefit or revenue sharing”. Yet, reports have shown how projects in Indonesia(opens in new window) and Peru(opens in new window) , from which Shell has bought many of its credits, reportedly violated Indigenous Peoples’ rights, including a court case in Peru ruling against the lack of consent by Kichwa communities at the Cordillera Azul project. 

Moreover, the ‘drive neutral’ campaign ran into problems from the outset. Already during its pilot phase, the UK’s Advertising Standard Authority found(opens in new window) that Shell had breached the advertising code on carbon neutrality claims. In 2021, the campaign was contested(opens in new window) in court by the Netherlands’ Advertising Code Committee for reportedly misleading customers to believe their emissions were ‘neutralised’. As a result, Shell was obliged(opens in new window) to remove all the campaign advertisements in that country. Later that year, a formal complaint(opens in new window) was submitted to Canada’s Competition Bureau alleging Shell Canada’s campaign misled the public. In 2023, Shell quietly retired its ‘Drive Carbon Neutral’ advertisements in Canada and the Bureau closed the complaint(opens in new window) . In 2024, a court in Germany reached(opens in new window) the same conclusion. 

Shell has bought credits from several other controversial projects that have alleged abuse of rights. Among these are rice-farming offset projects(opens in new window) in China that Shell used for its ‘carbon neutral liquified natural gas’ campaign, which were found to fail to reduce the claimed emissions. Shell has so far avoided(opens in new window) paying any compensation for the nearly 2 million carbon credits that it used, despite the rejection(opens in new window) of these projects by the standard-setting body Verra. 

Another part of Shell’s climate strategy is focused on actual reductions. This sounds like the correct thing to do. However, Shell’s accounting on this aspect also raises concerns. In 2023, Shell reported(opens in new window) that it reduced its total scope 1 and 2 emissions by 26 million tonnes between 2016 and 2023. However, 22.9 million tonnes, or 88 per cent of this reduction claim, were realised through sales of assets rather than real investments to reduce emissions. SOMO research has shown that many of these facilities continue to be operated by other companies that often appear to lack the finances and willingness to deal with the old and damaged infrastructure. ₄ In such cases, there is no actual reduction of emissions, but rather a transfer of responsibility for these emissions.  

For example, for over a decade, Shell has been divesting from the Niger Delta. These divestments are sold as working oil operations. In many cases, oil production has increased. Shell should have been aware of this prior to the sale, as the buying companies made clear they would expand production. Shell has, therefore, offloaded problematic assets that do not lead to any real emission reductions. 

Another troubling issue is gas flaring, which involves burning off massive amounts of gas. While Shell’s climate goal(opens in new window) to “eliminate routine flaring from upstream operations by 2025” sounds positive on paper, Shell makes clear in a footnote that this is “[s]ubject to completion of the sale of SPDC”. SPDC (the Shell Petroleum Development Company of Nigeria) is Shell’s subsidiary in Nigeria. Shell is not actually stopping with flaring; it is merely selling the problem, knowing that gas flaring will continue, and is likely to get worse. ₅ Gas flaring puts the health(opens in new window) of surrounding communities at serious risk and contributes significantly to climate change. 

Like most fossil fuel corporations, Shell is also planning to make substantial new investments in hydrocarbons. In 2023, Shell weakened(opens in new window) its climate target and announced it would grow its natural gas business. Yet, in 2024, the fossil fuel sector overall was responsible(opens in new window) for more than 40 per cent of credits used, with Shell leading the list by far. While reducing its investment in renewable energy, in March 2025, the company announced(opens in new window) plans to increase shareholder returns through to 2030. This follows Shell’s long focus on delivering big returns to shareholders.

Shell has faced lawsuits, campaigns, and opposition to its operations worldwide. A court case that started in 2018, led by Friends of the Earth Netherlands(opens in new window) , ordered the company to reduce its emissions by 45 per cent. In 2024, Shell appealed and won. The NGO has further appealed, and the case is ongoing. With communities around the world resisting the devastating impacts(opens in new window) of the historical and current operations of this multinational, it is without doubt another example of a climate failure.

Calling out polluters for what they are: climate failures

When large polluting companies announce ambitious-sounding climate targets and strategies to reduce emissions while planning a significant expansion of their fossil fuel-driven operations, there are significant problems. Expanding fossil fuel production and consumption is in itself a climate failure. The use of false and dangerous distractions like carbon offsetting is also a climate failure. The offset industry has consistently been exposed for its structural flaws that often lead to credits that only ‘cancel out’ emissions on paper. Certifications that ensure projects’ ‘social benefits’ have also been exposed for failing to identify and report on such abuses. 

It is clear that oil and gas companies, and the polluting industries that depend on them, are examples of climate failures. The Ecosystem Marketplace narrative that promotes those buying carbon credits as leaders in climate action is, to say the least, disingenuous and dangerous. 

Since fossil fuel companies have reaped billions in profits over the years, now is the time to show responsibility and pay for a rapid and just transition away from fossil fuels. Corporate climate leadership must centre on companies’ plans to actually reduce, in the short term, their extraction, production, and/or consumption of fossil fuels, with a medium-term target for a total phase out. There is no space nor time for dangerous distractions that legitimise the expansion of fossil fuels.