British Airways will offset all domestic flight emissions from next year, after its owner IAG became the first airline group to commit to net-zero carbon flying by 2050.

IAG’s chief executive, Willie Walsh, said that the company would reach the net-zero target largely through offsetting but pledged its airlines, including Aer Lingus and Iberia, would also substantially reduce emissions through sustainable fuels and replacing older aircraft.

Walsh said offsetting was the only way aviation could promise to carbon net zero and that electric or hydrogen planes would not be an option for most international flights. Offsetting allows companies to invest in environmental projects to balance out their own carbon footprints but it has been criticised as a get-out clause for highly polluting businesses.

Walsh said: “We will continue to use a carbon-based fuel throughout. We don’t see a credible alternative. It’s going to be some time until we see an electric or hybrid-electric plane … you’re looking at smaller aircraft capable of flying up to 150 passengers up to 1,000km. The technology to cover the entire network is some time away.”

However, he argued that aviation offsetting would invest in regulated, verified carbon-reduction schemes, whereas levies on flying would disappear into general taxation. He said: “In the past there have been concerns about the schemes. It’s very clear that any offsetting scheme has to be a permanent reduction in CO2, and verifiable.”

The aviation industry has set a general target of a 50% cut in emissions from 2005 levels by 2050, largely through offsetting in the Corsia scheme set up by the UN aviation agency, ICAO. Aviation accounts for more than 2% of global emissions but its contribution to CO2 levels is forecast to grow rapidly, due to rising passenger numbers and the industry’s reliance on fossil fuel-burning planes.

Walsh agreed flying could become “socially unacceptable” if it did not cut emissions. “For some people it will be, in the same way that a car is. But a lot of activity that is normal and socially acceptable today will not be in future.”

But, he added: “When I took my first flight in 1979 it was a privilege. The idea that you go back to where only a privileged few can experience flying is, I think, socially unacceptable.”

Walsh said BA was offsetting domestic flight emissions as people could choose to travel by train: “In the UK where there is an alternative, there is a greater focus on making sure aviation is paying its way to address the environmental impact.”

IAG is responsible for about 3% of global aviation’s emissions, which equates to 29.9m tonnes of CO2 per annum out of the industry’s 915m tonnes.

Walsh said BA would not fly its remaining 33 Boeing 747 jumbos, the heaviest consumers of fuel in the fleet, after 2024. Walsh said the new Airbus A350-1000, which has just entered service on the transatlantic route to Toronto, would typically use 43 instead of 70 tonnes of jet fuel to carry a similar number of passengers.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Questioned if it should do more, he said: “We are the first to do it, so if it’s not enough, the world has to do more. We’re aligning ourselves with the government. It’s a huge change from what the industry committed to, so it’s a challenging target, a lot of work and a lot of money.”

The cost of offsetting UK flights, which generate about 400,000 tonnes of CO2, is expected to be about €3.2m (£3m) next year. BA has pledged to invest £327m in sustainable fuel over the next 20 years, including its recently approved joint venture to build a waste-to-jet fuel plant in the UK.

Environmental groups, however, dismissed the IAG initiative. Greenpeace said BA wanted to “have their cake and eat it”. John Sauven, the executive director of Greenpeace UK, said: “Offsetting is no answer to the climate emergency that we face, where we have to stop business as usual. BA really need to think much more seriously than this.

“What we need is a frequent flyer levy, which would be a better way to go in terms of reducing demand.”