Is Carbon Offsetting Greenwashing?

Carbon offsets allow companies to compensate for their emissions, but critics argue that it’s not sustainable. Therefore, is carbon offsetting greenwashing?

June 17, 2024
Continuation of fossil fuels
Is Carbon Offsetting Greenwashing?
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Greenwashing in the fossil fuel industry: Is carbon offsetting greenwashing? 

Greenwashing is a form of advertising or marketing that companies use to appear more green and climate-friendly than they actually are. Oftentimes, greenwashing is a PR tactic employed by companies that emit large quantities of CO₂. In this article, we will discuss the link between greenwashing and carbon offsetting, which is when companies pay others to reduce emissions, instead of reducing emissions from their own operations. Is carbon offsetting greenwashing? 

In 2018, Statoil changed their name to Equinor, in an attempt to greenwash the oil from their name whilst they continue to explore and drill for new oil. Activists protesting Equinor drilling rig bound for arctic oil drilling. © Christian Åslund / Greenpeace

What is carbon offsetting?

Carbon offsetting is a process where companies compensate for their greenhouse gas emissions by investing in an equivalent removal of emissions. This can be done by actions like planting trees or restoring natural ecosystems. The idea is that companies can pay others to reduce emissions or suck carbon out of the atmosphere if they are not able or willing to reduce carbon emissions directly. Many companies are relying on carbon offsetting to reach their ambition to reach net zero emission by 2050. 

The problem with carbon offsetting is that it doesn't work in practice. Instead of reducing emissions directly, companies can portray themselves as more green than they actually are by investing in other projects, and so release them from their responsibility to restructure their business model in line with the global goal of limiting global warming to below 1.5 degrees Celsius. 

Examples of carbon offsetting 

Investing in renewable energy while still producing oil and gas, which emit carbon dioxide, is an example of carbon offsetting. Low-carbon solutions like carbon capture and storage are another. 

Read more: How are low-carbon solutions different from renewable energy initiatives?

Greenpeace Nordic campaigns against Equinor's oil expansion.

The environmental group protests outside Equinor's headquarters with banners reading ‘Their profit, our loss’ and ‘Our profit (Equinor's), Your Loss'.

© Rasmus Törnqvist / Greenpeace

What is greenwashing? 

Greenwashing is a strategy and conscious effort by companies to brand themselves as more climate friendly. They use adverts, PR campaigns, sponsorship or framing to make themselves appear greener than they actually are. 

Why do companies do greenwashing?

Companies greenwash to boost their reputation. Especially in this day and age, one cannot operate without considering the effects of climate change and how one’s carbon footprint impacts the climate. People and consumers are growing more conscious about the damage being inflicted on nature and the biodiversity of our planet through CO₂ emissions. 

How can you tell whether a company is greenwashing? 

There are a few important questions to ask if you want to determine whether a company is greenwashing or not. 

  1. What proportion of its investments or production is sustainable? 
    Many companies highlight one product or one certain investment and claim that this is their ticket to the energy transition through heavy promotion. In the fossil fuel industry companies may invest some in renewable energy, but the proportion of these compared to investment in fossil fuel production is a tell-tale sign of greenwashing. 
  1. What definition of sustainability does the company use? 
    What does the company consider to be environmentally friendly or aid the shift to climate neutrality? For example, it is common to promote the use of low-carbon solutions and carbon offsetting as sustainable efforts to help the transition to more climate-friendly energy solutions. But low-carbon solutions are not the same as renewable energy sources, as they are not replenished naturally and are in fact steps taken to minimise the harmful carbon emissions of oil and gas and could also be a way of prolonging the fossil fuel era. 
  1. How does the company compare to others in the same industry? 
    In the fossil fuel industry there are many players who are under the same pressure to make significant changes to their operations and shift to more environmentally friendly solutions. If a leading actor within the industry, like Equinor, invests in low-carbon solutions and promotes this as a green effort, many other companies can follow suit. This leaves them with the option to disregard renewable energy investments as well and rather greenwash their efforts, while developing new oil fields and producing more oil and gas. In other words, a leading force in the industry might enable a domino-effect of greenwashing.  

Carbon offsetting have many of the same advantages as greenwashing 

Carbon offsetting can boost a brand’s reputation and growth, in addition to helping them comply with regulations while saving costs. By doing carbon offsetting, companies can demonstrate to clients, consumers and stakeholders that they are taking measures to reduce their carbon footprint. Oftentimes there are ESG standards that companies must comply with, which can be addressed through carbon offsets. 

It is clear that carbon offsets provide companies with some of the same advantages as greenwashing does. Companies greenwash to appear more environmentally friendly than they actually are, and brand themselves as more sustainable. This sends signals to shareholders and consumers that they are taking climate change seriously. 

Is carbon offsetting greenwashing? 

Yes, in many cases carbon offsetting can be perceived as greenwashing. If companies are able to use offsetting credentials to make their environmental impact seem more significant than it actually is, they deceive the public. When companies fail to prioritise emission reduction or investment in climate friendly solutions, the significance of trading in carbon offsets is called into question. Carbon offsetting is no replacement for emission reduction or investment in climate friendly solutions, and can be used as an excuse for companies for the continuation and even expansion of high-carbon activities.

Additionally, if a company spins the story to its advantage, by pointing out the steps it has taken to ensure compliance with regulations, then it resembles a PR-stunt. Such moves to improve the reputation of a company are in line with the definition of greenwashing. Greenwashing is a practice where organisations spend more resources on advertising being green than on environmentally sound practices. If the company is misleading people to think that carbon offsetting has a greater effect than it does in reality, this can arguably be seen as greenwashing. 

Greenpeace protest at the Statoil commissioned oil rig West Hercules bound for Arctic drill for oil. In 2018, Statoil changed their name to Equinor, in an attempt to greenwash the oil from their name whilst they continue to explore and drill for new oil. © Christian Åslund / Greenpeace

How does Equinor, a big player in the fossil fuel industry, perform on these questions? 

Equinor promotes itself as responsible and is taking steps to be perceived as a serious player to ensure a smooth energy transition. Sadly much of the company’s rhetoric and actions show signs of greenwashing.   

Equinor’s rebranding and promotion of low-carbon solutions

In 2018, Equinor changed its name from Statoil to re-position itself as a «broad energy company», prepared for the future and committed to supporting a swift energy transition. They wrapped their marketing in a greener format, and chose the name «Equinor» for its association with «equality» and «equity».1 

In 2023, less than 1% of the company’s energy production was renewable.2 Even though Equinor wants to frame itself as a «broad energy company», it is clear that it is still very much a fossil fuel company. More than 99% of its production the same year came from oil and gas, and it continues to explore and develop new oil fields across the world, from the projected Rosebank oil field in the UK to exploratory projects in the Argentine Sea

March in Mar del Plata against Offshore Oil Exploration © Diego Izquierdo / Greenpeace

Reputation abroad 

Equinor invests hugely in upholding its brand as a responsible company. In Norway it is perceived positively, mostly due to the historical significance of the oil discovery in the late 1960s and the following financial impact cultivating the largest sovereign wealth fund in the world. The tune changes dramatically when we look at how Equinor is perceived internationally. 

Many of Equinor’s international projects and exploratory investments have a devastating impact on the local population and its economy and opportunities. There has been uproar from the locals in countries across the world, from Argentina and Brazil, to Canada and the United Kingdom.3 In 2020 we saw a clear-cut example of the broad, national resistance to Equinor’s overseas fossil fuel projects. In Australia, the aboriginal and local population, in addition to local tourism and seafood organisations, fought hard to stop a planned deepwater drill in the Great Australian Bight Marine Park. Met with this huge resistance, Equinor abandoned the $200 million project and declared the controversial project would not make commercial sense.4 

Greenwashing in the fossil fuel industry 

Many people believe carbon offsetting can be part of the solution to climate change. However, in our opinion it is clearly a scam. Carbon offsetting is controversial because it is potentially worthless and may not limit emissions or impact the environment positively. It is also argued to be a way for companies to greenwash. 

Fossil fuel companies underline the potential of low-carbon technologies, but there is an argument to be made that low-carbon solutions inevitably ensure the continued lifespan of oil and gas production. So why should we focus on false solutions like carbon offsetting that either count as greenwashing or continue to replenish fossil fuel production. Rather the focus should be directed towards renewable energy that replenishes automatically and naturally, and shift towards a fossil fuel-free future. 

List of references: 

  1. Oil Change International (2018) An Early April’s Fool? Statoil Rebrands Itself as Equinor 
  2. Greenpeace Nordic (2023) The truth about Equinor’s global projects, page 4 
  3. National Observer (2022) Why climate activists say getting Equinor out of oil and gas is a vital – and winnable – fight 
  4. The Guardian (2020) Great Australian Bight: Equinor abandons plans to drill for oil