Carbon offsetting costs could soar over 250% in the coming decade, leaving companies at risk of missing net-zero emissions targets, PwC analysts have warned.
“If we get to that stage where the use of offsetting to reach net-zero targets becomes sufficiently expensive [...] companies will be unable to meet their net-zero commitments,” PwC sustainability partner Ian Milborrow said.
FTSE 350 companies spent £38mln on voluntary carbon offsets in 2022, though costs for the equivalent number of credits could rise by 256% to £154mln by 2030, according to PwC.
“Companies across all sectors must consider the potential financial impacts of rising offset prices as part of their net-zero planning,” Milborrow warned.
Companies are increasingly relying on carbon offsets, where a third party is paid the equivalent price of removing one tonne of carbon, to artificially reduce their footprints.
97% of FTSE 350 firms had upped spending on carbon offsetting in the year to January, while 47% claimed more capital would be directed towards the schemes by 2025, a report from Kana Earth found.
Despite the growing popularity and subsequent anticipated price rises of carbon credits, critics have argued that the schemes are often fake and do not lead to reduced emissions.
David Antonioli, boss of global carbon credit certifier giant Verra, announced he would step down last week, after accusations that the firm had approved millions of worthless offsets.
A survey of FTSE 350 board directors also found that many invested in environmental projects abroad, where a lack of universal regulation has led to concerns over project authenticity.