EU Passes Legislation: Carbon Offsetting Activities Ban the Use of "Carbon Neutral" Labels?

Recently, the European Union's "empowering consumers for the green transition" directive was officially published in the Official Journal of the European Union, which has become official law in the European Union.

The law prohibits environmental impact claims based on greenhouse gas emissions offsets, which is equivalent to a ban on the promotion of "carbon-neutral products" or "carbon-neutral activities" based on carbon offsets. The ban will be enforced from September 27, 2026.

At that time, terms that rely on offsets, such as "climate neutral" or "climate positive", will be banned in the EU as part of the fight against misleading environmental claims.

Previously, members of the European Parliament (MEPs) had voted to ban the use of terms such as "environmentally friendly", "natural", "biodegradable", "climate-neutral" or "ecological" without evidence, as well as a blanket ban on the use of carbon offset schemes to substantiate these claims.

According to this directive, the EU only allows the use of sustainability labels from approved certification schemes. Currently, there is widespread concern about the environmental impact of carbon offset schemes. Carbon offset schemes are often used to justify labeling products as "carbon neutral" or to imply that consumers can fly a plane, buy new clothes, or eat certain foods without exacerbating the climate crisis.

Anna Cavazzini, chair of the Internal Market and Consumer Protection Commission, said: "This new legislation puts an end to misleading advertising of so-called environmentally friendly products, thus enabling consumers to make sustainable choices. ”

"I am particularly pleased that claims such as 'climate neutral' or 'climate positive' based on CO2 offsets have been completely banned from the European market. We welcome corporate investments in climate protection projects, and of course, they can still communicate. "However, it should no longer be assumed that planting trees in the rainforest makes the industrial production of cars, the organization of the World Cup or the production of cosmetics irrelevant to the climate. This deception is now a thing of the past. This is a huge success for the environment, the climate and consumers. ”

The directive follows months of negotiations in the EU on how to regulate environmental claims, and an agreement was reached, which was eventually approved. Member States now have two years to introduce the new rules.

In January, the Guardian published a joint survey of forest carbon offsets approved by the world's leading certification bodies for sustainability commitments by large companies, and found that more than 90% of the offsets were worthless.

Environmental NGOs have raised concerns about claims based on carbon offsets, including the 2022 World Cup in Qatar, which was advertised as a "carbon neutral" event.

"This agreement is a big step towards more honest business practices and more informed European consumers. The EU is leading the fight against 'greenwashing,'" said Lindsay Otis, CMW's global carbon market policy expert. "The claim of carbon neutrality has proven to be incomprehensible to consumers, and everything must stop. These baseless advertisements must come to an end, because they send the wrong message to consumers to believe that their food, clothing, housing and transportation have met carbon neutrality standards.