Pay to plant some trees and you can fly guilt-free, with the carbon emissions from your journey cleanly and cheaply offset. You may never see those trees grow, but there are companies willing to give you a receipt and tell you the job is done.

That’s the crux of the unregulated carbon offsetting market; it works on a combination of good faith and a little witchcraft and it’s something the former governor of the Bank of England wants to change.

Now UN special envoy on climate action and finance, affable but steely Canadian Mark Carney told the Financial Times that the current offsets market “operates in the shadows”, with some good “but lots of bad” in the system “that does actual harm.”

The practical problem he faces is whether the offsets have any positive climate value; the philosophical one is whether using a carbon offset on a fossil fuel has any basis in logic.

In a voluntary and unregulated market, who is using offsets and how many of them, is often unclear since there is no requirement for buyers to prove their positive impact. Concerns over the quality and integrity of offsetting schemes have been a problem since they were first introduced more than 20 years ago.

Critics say they often do not capture as much carbon as they claim and many still view them as providing companies with a licence to pollute and represent a bad use of money that would be better spent on efforts to cut emissions.

Financial institutions were the largest users of offsets in 2019, followed by the chemicals and petrochemicals industries, according to the Trove Research. Some schemes – including selling offset credits on forests scheduled for felling – test the limits of credibility.

As to philosophy, Gilles Dufrasne, of green lobby group Carbon Market Watch told the FT: “I don’t think there is such a thing as a ‘carbon neutral’ fossil fuel, it’s a bit of an oxymoron.” He was referring to a scheme by Shell which will supply PetroChina with an undisclosed quantity of LNG branded carbon neutral on the basis of carbon offsets using trees that will absorb millions of tonnes of carbon emitted over the coming years, balancing out the pollution from the production and use of the fuel.

To try and bring some order to the process, Carney has teamed up with Bill Winters, chief executive of Standard Chartered, launching a task force to address the problems with offsets.

The initiative hopes to transform the offsets market from a fragmented and mistrusted system into something that traders at a bank would recognise. It aims to develop new rules for ensuring credits are of a high quality and create a core reference contract to make offsets fungible for international trading and relatable to the financial services market. Enforcement will be via a new governance body to provide the stick.

Scaling up and professionalising the market faces technical challenges which can probably be overcome with time and a willingness to engage. A bigger problem may be that current users like the ‘Wild West’ feel and the low prices. Many credits are available to buy for less than $5, much less than the cost of carbon in regulated systems such as the EU’s ETS, which saw prices hit €60 per tonne on August 30.

But Carney is resolute about the positive merits of proper carbon accounting. The market, he said, “has to demonstrably reduce carbon, save carbon”, and if it doesn’t, it will simply not take off, he says. “The consequence of that is that we will all be in a worse position.”