The White House announced guidelines this morning to strengthen the market for carbon offsets, otherwise known as the voluntary carbon market. Offsets allow companies or individuals to buy credits tied to emissions reductions created by projects that remove carbon from the atmosphere, many of which are in the developing world.

But, as Brad Plumer reports today, carbon offsets have been heavily criticized and a “growing number of studies and reports have found that many carbon offsets simply don’t work.”

So why has the Biden administration moved in to help fix a market that has drawn so much criticism?

The case for offsets

Carbon offsets, however imperfect, are a way of getting billions of dollars to developing nations that doesn’t involve the tricky politics of foreign aid. Treasury Secretary Janet Yellen hinted at that in a statement about today’s announcement.

“Voluntary carbon markets can help unlock the power of private markets to reduce emissions, but that can only happen if we address significant existing challenges,” she said.

At their best, carbon offsets allow companies that are trying to reduce their environmental impact to do it faster. Carbon offsets often fund projects that can help developing nations grow their economies more sustainably, including ecosystem restoration efforts and distributing clean cookstoves as alternatives to open fire cooking,

At their worst, carbon offsets have been criticized as the ultimate greenwashing tool. They can give companies that don’t want to abandon fossil fuels a way to claim they’re helping to curb emissions, offering cheap credits from projects that enrich middlemen, overestimate emission reductions and abuse the land rights of local communities.

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