Guest Post: Sabin Center Expands the U.S. Climate Litigation Database with New Carbon Offsets Case Category – Climate Law Blog

As markets for both voluntary and mandatory carbon offsets and credits have grown in recent years, the number of lawsuits involving offsets or credits also has increased. For example, American consumers have recently sued multiple companies, including Delta and Danone Waters (which sells Evian bottled water), for making potentially misleading claims of being “carbon neutral.” Typically, companies make such claims based on their purchase of carbon offsets that, in principle, reduce or avoid carbon emissions or remove carbon from the atmosphere in an amount equal to emissions that the company produces. In practice, the carbon offset industry is often plagued by spurious accounting, limited accountability, and implausible promises of significant carbon sequestration that have not translated into reality.

As an increasing number of parties litigate “climate washing” claims related to the use of carbon offsets, as well as other issues related to the creation, sale, marketing, and use of offsets and carbon credits, the Sabin Center has decided to expand our U.S. Climate Litigation Database to include a carbon offsets and credits case category. We hope the new category will provide a resource to attorneys working on matters related to carbon offsets, as well as to others interested in how litigants and courts are addressing issues raised by the voluntary and mandatory use of offsets and credits. (The Global Climate Litigation Database will be updated with a new case category in the near future.)

Methodology

Potential cases for inclusion were identified by searching certain key phrases in the state and federal case databases of LexisNexis and Westlaw. These phrases included “carbon offset,” “carbon credit,” “carbon neutral,” and “cap-and-trade.” In keeping with the Sabin Center’s criteria for inclusion in the database, each case was reviewed to determine whether carbon offsets or credits were a material issue of fact or law.

Cases that met the criteria were then sorted into three subcategories: regulatory, commercial, and marketing. Regulatory cases most often involve a dispute between an environmental organization and a state or federal agency regarding the use of carbon offsets. A large proportion of these cases include claims made under the California Environmental Quality Act, which requires state and local agencies to publicly disclose environmental impacts of proposed projects. Often, the plaintiff in these cases has challenged an agency’s reliance on carbon offsets to mitigate the project’s carbon emissions. Other regulatory cases involved issues related to the use of offsets and credits in cap–and–trade systems such as California’s system. Cap-and-trade systems typically allow firms to purchase offsets to ensure they do not produce emissions greater than their allotment.