One of Britain's leading ethical travel operators has launched a scathing attack on the carbon offset industry and has decided to stop offering offsets to its customers as a way of reducing their greenhouse gas emissions. Justin Francis, the founder of responsibletravel.com, said he had decided to abandon offsets because he believes they have become a "medieval pardon that allows people to continue polluting".

In 2002 his company became one of the first British travel operators to begin offering customers the opportunity to buy into an offsetting scheme. By paying money to a third party operator that ran carbon-reducing projects in the developing world, holidaymakers could jump on board flights supposedly happy in the knowledge that any carbon dioxide released during their journey would eventually be reduced by the equivalent amount somewhere else.

Supporters of the scheme, which has now become a multibillion pound industry, say it is a vital way of quickly reducing the world's carbon emissions and combating climate change. But a growing number of critics say it is simply a way for people and businesses in the developed world to buy their way out of a problem without actually committing themselves to reductions in their own emissions. After years of falling into the former camp, Mr Francis has now joined the growing number of offset critics.

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"Carbon offsetting is an ingenious way to avoid genuinely reducing your carbon emissions," he said yesterday. "It's a very attractive idea – that you can go on living exactly as you did before when there's a magic pill or medieval pardon out there that allows people to continue polluting."

As some of the top polluters, the aviation and travel industries have been keen to promote carbon offsetting to their customers. Until a fortnight ago responsibletravel.com used Climate Care, a major offsetting company which was recently acquired by the investment bank JP Morgan. But Mr Francis said he became increasingly uneasy about the way the travel industry was using carbon offsets and pulled his company out of the scheme.

He added: "It was not an easy decision. It would have been much easier for me to go on blithely offering offsets, keeping my head below the parapet. But ultimately we need to reduce our carbon emissions. We can do this by flying less – travelling by train or taking holidays closer to home for example, and by making carbon reductions in other areas of our lifestyles too." His decision, however, has been criticised by carbon offset companies who are adamant that buying carbon credits does lead to a tangible reduction in greenhouse gases.

Climate Care did not comment yesterday but James Ramsay, the commercial director of another offsetting firm, Carbon Clear, said: "If you are going to take the view that offsets don't work then presumably you just stop there. But the trajectory that we've got to achieve for climate change doesn't give us the luxury of time. Waiting for, say, the aviation or travel industry to reduce its emissions leaves us way behind the trajectory of achieving 80 percent cuts in global carbon emissions by 2050."

Carbon offsetting is something that has always divided the environmental movement. It was quickly transformed from a minor experimental idea into a multimillion-pound carbon market. Europe's carbon market alone is now worth £81bn and is expected to account for at least half of the European Union's carbon reductions to 2020.

Responsibletravel.com say they will now attach "carbon warnings" to their holiday packages detailing the damage done to the environment by a flight, just as cigarette packets warn of the hazards of smoking. "What we have to do is offer holidays that are the most beneficial to the environment," Mr Francis said. "What we have to tell people is: 'Fly less and when you do fly, make it count'."

A multibillion-pound industry: The cost of a clear conscience

What do some of the major offset companies charge for offsetting a return flight from London to Sydney for two people?

*Climate Care: 11.23 tonnes of CO2 which costs £98.03 to offset.

*Carbon Clear: 2.82 tonnes of CO2 which costs £21.15 to offset

*The Carbon Neutral Company: 6.1 tonnes of CO2 which costs between £52 and £122 to offset depending on which project you choose

*Offset Carbon: 8 tonnes of CO2 at £76

*What do you get? Carbon Neutral Company offers a number of options to offset a return flight to Sydney. The cheapest, costing £51.85, goes towards capturing methane gas from a landfill in China, the most expensive (£122) invests in a dam in India.