SANTA FE, N.M. - Supporters of a bill in the New Mexico Legislature say it would transform power and control of the state's electric supply, creating a 21st-century renewable-energy policy for the state.
Senate Bill 83, known as the "Local Choice Energy Act," would give local governments the ability to purchase electricity from a provider of their choosing, rather than utility companies that often are beholden to Wall Street investors.
Santa Fe Mayor Alan Webber, who testified in favor of the bill, said that by increasing competition, consumers would benefit from lower utility bills.
"I think a combination of technology, climate-change issues, economics and different political environment are all combining to begin to put into place the building blocks of a comprehensive energy policy for New Mexico."
Nine states - including California, Illinois, and Ohio - already have passed similar legislation known as "community choice aggregation," allowing tribal and other local governments to take advantage of competitive bids for municipal electricity supply.
Sen. Jeff Steinborn, D-Doña Ana County, the bill's lead sponsor, said the legislation is needed because it addresses economic inequality and climate change, while offering customers what he called more stable and resilient energy-efficiency options that help create a clean-energy economy.
"New Mexico, it felt like we were on the Stone Age side of unleashing renewables and clean energy, and competition in the state," he said, "so this legislation is something that I think has been long overdue."
Supporters of the Local Choice Energy Act point to the success of water conservation in Santa Fe after the city purchased the water utility from Public Service Company of New Mexico in 1995. Since then, said Jesse Roach, who heads Santa Fe's water division, the overuse of water has been sharply curtailed.
"It looks like we peaked at about 13,000 acre-feet in '95 and now, we're down as of last year to closer to 8,000 acre-feet," he said, "and we've been adding customers that whole time."
Investor-owned utilities have said they're concerned local-choice energy won't be as reliable for customers, despite local-choice becoming more popular nationwide.
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By Seth Millstein for Sentient.
Broadcast version by Nadia Ramlagan for Kentucky News Connection reporting for the Sentient-Public News Service Collaboration
Shortly after taking office in January, President Trump issued a flurry of executive orders seeking to reverse or limit federal action on global warming, and cast doubt on the future of countless climate change-oriented policies in the U.S. One of the most popular tools for fighting climate change is carbon offsets, and they could well be impacted by Trump’s rollback of pro-environment policies.
However, the biggest threat to carbon offsets’ viability isn’t the Trump administration. It’s their own ineffectiveness, and potential to allow major polluters — including the owners of factory farms — to continue to engage in practices that are systemically unsustainable. Despite their popularity, there’s a growing consensus among experts that carbon offsets, which are meant to reduce carbon dioxide emissions, are not an effective tool for fighting climate change, and in some cases may do more harm than good.
“They have a really big credibility problem right now,” Tina Swanson, senior scientist at the environmental nonprofit Project Drawdown, tells Sentient. “Most carbon credits out there are not reducing carbon in the way that they are purported to do.“
Why is it that carbon offsets, the market for which is estimated to be around $800 billion, so often fail to do what they purport to do?
To answer that, let’s first look at what a carbon offset is.
What Are Carbon Offsets?
The idea behind carbon offsets is that polluters can “offset” the impact of their own carbon dioxide emissions by funding programs that reduce emissions elsewhere. A simple example of this would be an oil company paying to have trees planted in the Amazon, as trees trap carbon from the atmosphere.
Carbon offsets are often touted as a way for companies to neutralize their emissions. As such, the meat and dairy industry are increasingly turning to offsets — or, a newer carbon market scheme called insets — as a marketing tool. By purchasing carbon credits or funding reforestation projects, these companies can promote meat and milk as “carbon-neutral” or “climate-friendly,” when, in reality, they are anything but.
In practice, carbon offsetting first requires some entity to commoditize emissions-reducing programs, such as carbon farming (carbon markets for regenerative farms), so that they can then be “purchased” by high-emissions companies seeking to offset their emissions.
These transactions take place on carbon markets, of which there are two types: voluntary carbon markets, which are optional to participate in, and compliance carbon markets, which companies generally enter into in order to comply with state, federal or national laws regarding emissions.
It’s a nice idea, in theory. In fact, many climate solution models for food systems rely on some number of carbon offset initiatives to arrive at their climate goals. Globally, food systems are responsible for around a third of all greenhouse gas emissions, with most food-related emissions fueled by beef production.
But over the years it has become clear there are a number of problems with carbon offsets, both on a conceptual and practical level. As a result of these problems, many carbon offsets provide few to no benefits. Others actively make climate change worse, by enabling polluters like the meat and dairy industry to avoid making any changes. Let’s look at why.
Why Carbon Offsets Ultimately Aren’t a Climate Solution
There are three problems with carbon offsets as a climate solution. Let’s dig into each of them.
Problem #1: Carbon Offsets Can’t Be Our Only Form of Climate Action
The first issue with carbon offsets is a foundational problem with the concept itself: In order to actually reach net-zero emissions, polluters cannot only rely on offsets. These industries also need to emit less carbon on their own.
“In order for us to meet our climate goals — whether it’s 1.5 [degrees] or two — we’re going to have to reduce emissions to the point where the amount of CO2e [carbon dioxide equivalent] that we emit equals the amount that is absorbed by whatever existing natural systems, or technological systems, exist on the planet,” Swanson says, referring to the broadly accepted goal of limiting global temperatures to 1.5 degrees above pre-industrial levels. “If you’re paying someone else to reduce emissions but not reducing your own, that is not positive progress.”
Problem #2: Most Carbon Offsets Don’t Reduce Emissions
The second problem is practical: According to a growing volume of research, most carbon offsets don’t actually reduce emissions. There are a number of reasons why, which we’ll look at in a moment.
Problem #3: The ‘Moral Hazard’ of Carbon Offsets
The last problem is what Swanson calls the “moral hazard” of carbon offsets as a plan for reducing emissions. If a person or company buys an offset that doesn’t actually work, they might continue to pollute as they normally would, under the mistaken belief that they’ve done their part to fight climate change.
“If you go out there and you spend money to have somebody else reduce emissions, it basically gives you permission to not reduce your own emissions,” Swanson says. “There’s a risk that not only will it not effectively get us to net-zero, it actually may even slow emissions reductions by those entities that are buying the carbon credits and using them as offsets.”
How Carbon Offsets Fail
Researchers now have quite a bit of evidence that most carbon offsets don’t actually reduce emissions.
In 2023, a nine-month investigation into Verra, the leading certifier of voluntary carbon offsets, found that up to 90 percent of the non-profit’s rainforest offsets were “worthless,” and did not bring about a reduction in emissions. A 2017 study by the European Commission found that 85 percent of offsets used by the European Union under the UN’s Clean Development Mechanism also didn’t reduce carbon emissions, while a 2023 meta-study covering over 2,000 offset projects concluded that only 12 percent of them effectively reduced emissions.
But why exactly are carbon offsets so ineffective in accomplishing their stated goal?
Reason #1: Unintended Consequences
Often, well-intentioned carbon offset plans fail due to unforeseen consequences and side-effects of the offsets. Cookstove projects are a prime example of this.
In many parts of the developing world, food is cooked and water is heated using a setup called a three-stone fire. It’s essentially a stove, plate or other heating surface balanced atop three rocks and heated with flaming wood, or other biomatter, underneath. Though easy to use and maintain, three-stone fires are spectacularly inefficient, as the vast majority of the heat they generate — between 85 and 90 percent, according to some studies — escapes into the air without warming the food in question. Instead, this heat warms the planet, as the black carbon that these stoves emit is a short-lived but extremely potent greenhouse gas.
In an attempt to bring down these emissions, there have been many efforts to bring more efficient stoves to the regions in which three-stone fires are the norm. Some of these efforts have taken the form of carbon offset programs; the hope is that if families using three-stone fires replace them with more efficient cookstoves, the net result will be lower emissions.
In practice, it hasn’t quite worked out that way.
Because these new stoves are so much more efficient, the families that receive them often end up cooking more food in total than they’d been cooking with the three-stone fires. Sometimes, this means using the efficient stoves — which still emit some amount of CO2 — more frequently than they’d been using the three-stone fires; in others cases, it means families are now using both the new stoves and three-stone fires concurrently.
As a result, a 2024 study found that the emissions savings of cookstove carbon offset programs are overstated by around 1,000 percent. However, it’s worth noting that one offset certifying company, Gold Standard, “only” overstated the emissions savings of cookstove offsets by 150 percent.
A similar problem is also common in carbon offset programs that claim to protect trees from deforestation. Preventing a section of trees from being cut down is good — but if the result is that the deforesters simply cut down an adjacent section of trees instead, which is often what happens, the “protection” effort hasn’t really accomplished anything.
Reason #2: Lack of ‘Permanence’
In order for a carbon offset to be effective, it must have what experts call “permanence.” This means that the carbon they store must be stored forever, not just temporarily, and it applies primarily to offsets purporting to trap and sequester carbon.
Tree-centered offsets are the prime example of this. Suppose a carbon offset program successfully protects an acre of trees from being deforested for 10 years. Over the course of that decade, the trees will remove a significant amount of carbon from the atmosphere, which is obviously a good thing.
But suppose that after 10 years, a forest fire destroys that acre of trees. This will release all of the carbon they’ve stored, every ounce of it, back into the atmosphere, thus completely undoing all of the project’s progress and essentially rendering it worthless.
This isn’t just a theoretical worry: One study of a forest preservation offset program found that four years after its launch, half of the trees it claimed to protect were no longer there.
Soil carbon sequestration is another type of offset that faces permanence problems. Soils store carbon naturally, and for a time many soil scientists touted the idea that certain regenerative farming practices, like planting certain crops, could boost the amount of carbon on farm soils, serving as a powerful tool for climate action. Backed by U.S. Department of Agriculture support and investment, a number of carbon offsets programs were launched to pay farmers for their carbon farming efforts.
But soil’s grasp on the carbon that it takes in is tenuous. Research has shown that carbon added to the soil closer to the surface doesn’t stay put, unlike deeper carbon stores that date back tens of thousands of years. Weather, microbial activity, climate change and standard farming practices like tilling can disrupt the soil and release that carbon back into the atmosphere too, thus negating any theoretical emissions reductions.
Reason #3: Lack of ‘Additionality’
In addition to permanence, carbon offset programs also need what’s called “additionality.” This means that the offset issuer can’t purport to be reducing emissions that were never going to be emitted in the first place. Unfortunately, they often do.
For instance, it’s not uncommon for carbon offsetting companies to claim that they’re protecting trees from deforestation when in reality, the trees in question were never marked for deforestation in the first place.
In 2021, a study found that the majority of wind farms built in India as part of a UN-endorsed carbon offset program would have been constructed even without the offsets, while a 2024 Washington Post investigation found that most forest preservation offsets in the Amazon claimed to be protecting forest that was already on protected land.
Reason #4: Questionable Logic
Sometimes, carbon offsets fail due to slippery interpretations of what it means to “reduce emissions.” This is a key point of contention in California’s Low Carbon Fuel Standard (LCFS), a program aimed at reducing transportation-related emissions in the Golden State.
The LCFS requires the carbon intensity of all fuel sold in the state to decrease every year. In order for this to happen, bulk fuel producers need to either sell less fuel, reduce the carbon emissions inherent in their own supply chains, or purchase carbon offsets.
Around 80 percent of the offsets in the LCFS programs are biofuels. This is a type of fuel, made from organic matter, that emits fewer greenhouse gasses than fossil fuels. As such, every gallon of biofuel that’s sold instead of fossil fuel constitutes a reduction in emissions.
Does it really, though? After all, biofuels are still a form of diesel fuel, and as such, they still perpetuate a reliance on vehicles that run on gas, and gas-guzzling cars emit far more CO2 than their electric counterparts. What’s more, many biofuels are created by repurposing the waste from factory farms, which themselves are enormous emitters of greenhouse gasses.
California has the self-imposed goal of reaching 100 percent zero-emission vehicles by 2035. Many have argued that reinforcing the state’s reliance on diesel-powered vehicles undercuts this goal and, more generally, the goal of moving away from gas as a fuel source.
How Will the Trump Administration Impact Carbon Offsets?
The federal government’s involvement in carbon offsets is surprisingly minimal. There is no federal compliance market for carbon offsets in the U.S., though several states have erected them, and while the Biden administration did release a broad set of guidelines aimed at shoring up the carbon offset market, they are non-binding and unenforceable.
It’s been suggested that the Trump administration’s broadly anti-environment agenda might indirectly impact carbon offset projects, though it’s too soon to say how.
It’s possible that Trump’s general opposition to pro-climate policies could lead to a general increase in U.S. emissions, which could in turn lead to more companies buying carbon offsets. Alternatively, a decrease in federal funding for climate research could impede the continued development of carbon-trapping machines, which are sometimes used in carbon offset projects.
The Bottom Line
Swanson stresses that, though carbon offsets have myriad downsides, the mere act of paying somebody else to reduce their carbon emissions, or trap other people’s emissions, isn’t necessarily in itself a bad thing.
The problem, she says, lies with the word “offset,” and more broadly, with the perception that carbon credits somehow “cancel out” the carbon that is emitted.
“There is value in entities, or parties, paying to help other people reduce emissions,” Swanson says. “But if you’re doing that for the purpose of not having to produce your own emissions, then in terms of the sort of unrelenting and unforgiving math of climate change, it’s not going to cut it.”
Seth Millstein wrote this article for Sentient.
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