When David Cameron flew to India to open a JCB factory for a party donor, green-thinking supporters could rest assured that his visit would be carbon neutral. “We are offsetting all our emissions through Climate Care,” the Tory leader wrote on his blog. “As well as planting trees, they also invest in renewable energy projects in the developing world.”

Somewhere in the Indian countryside, a farmer is about to repay Mr Cameron’s debt to the planet. Climate Care’s latest enterprise is to provide “treadle pumps” to poor rural families so they can get water on to their land without using diesel power. The pumps are worked by stepping on pedals. If a peasant treads for two hours a day, it will take at least three years to offset the CO2 from Mr Cameron’s return flight to India.

Climate Care, whose clients include the Prince of Wales, is the leading brand in the fast-expanding but unregulated field of offsetting, in which consumers pay to make good the energy they emit through travel or heating. These businesses claim that they can negate pollution by planting trees or by paying for renewable power such as windmills or hydroelectrics.

Climate Care says that it has offset a million tonnes of carbon since it was founded ten years ago. It has just made the claim that it will sell enough offsets to neutralise 1 per cent of carbon emissions in Britain next year. But it was targeted last week by activists dressed as “red herrings”, who delivered fish to its Oxford premises. “Climate Care are misleading the public, making them believe that offsetting does some good,” said Joss Garman, a protester. “It’s like being a member of the RSPCA then going home and kicking a dog.”

Visitors to the company website are invited to offset their greenhouse gas emissions after consulting a “carbon calculator”. A return flight from Manchester to Tenerife is measured at 0.65 tonnes of CO2 . That will be £4.91.

But the treadle pump initiative raises the moral predicament of offsetting: decadent Westerners paying for their pollution to be neutralised by people in developing countries. “That particular project is an outrage because it’s so exploitative,” said Jutta Kill, of the green campaigning organisation Fern. “It’s just disgraceful.”

Customers of the Cooperative Bank will soon be making payments towards Indian peasants’ “human energy”, as Climate Care calls it. The bank is marketing mortgages with a built-in “donation to Climate Care” equivalent to a fifth of the CO2 emissions of a typical British home.

Publicity from Climate Care claims that a treadle pump saves 0.65 tonnes of carbon a year, the amount that would have been emitted had the farmers used diesel. The pumps are part of a programme run by IDE-I, the respected Indian poverty relief organisation, and funded by charities and governments. They appear to have been designed to help families who cannot afford to buy a diesel pump.

But an independent study of treadle pumps in a village in Uttar Pradesh found that families there had previously hired a diesel pump for a maximum 30 hours per year. That suggests each was emitting 0.03 tonnes of carbon at most, nothing like the claimed savings suggested by Climate Care.

The company admits openly that it claims that the leg pumps save carbon, even if the farmers previously did little or no diesel pumping.

It argues that, as the economy grows, more irrigation would take place and so more diesel would be used, so the pumps provide a sustainable alternative to prevent the potential increase in carbon emissions.

Mike Mason, 53, an engineer, founded Climate Care and has never taken a salary. He told The Times: “I accept that if you say, ‘Has this reduction happened right now?’, the answer is ‘no’. But what we are desperately trying to do is to intervene in development paths. No scam involved.”

Ed Hanrahan, chief operating officer, rejected the accusation of exploitation. He said: “That’s like saying giving a man a bicycle to cycle to work when previously he was having to hire a car is exploitative of human labour.” Climate Care said that the pump project had been entered for the Voluntary Gold Standard, an independent verification scheme. Two of the company’s 50 projects have been submitted; neither assessment is complete.

Climate Care generally takes money from customers in exchange for a commitment to neutralise a certain amount of carbon. Most individual customers cannot tell where or when the offset was achieved, since there is no public register that matches sales to projects. By contrast, The Times discovered that leading corporate investors insisted that their projects were ring-fenced. Land Rover said: “We have built into the system that any customer can ask where their money went to, how it was spent. If they give us their vehicle ID number, we will be able to trace exactly the project their money was spent on.” The Times has also used the company to offset the carbon on flights taken by reviewers from its travel section. Climate Care’s accounts show a “carbon balloon” of promised reductions more than quadrupling in two years to £420,000, equivalent to 56,000 tonnes of carbon waiting to be offset. The company insisted that it had more than enough offsets in its portfolio to satisfy its commitments. Sales rose tenfold last year.

It also says that it takes responsibility for delivering the full amount of any emissions reductions sold. If a project delivers less than expected, then Climate Care will add new projects to make up the shortfall.

In recent months, it has moved its projects arm to a new company registered in Nairobi, where it has an office. By searching the Kenyan business register, The Times discovered that this is part of a vehicle based in the British Virgin Islands. No mention of Climate Care’s presence in the Caribbean tax haven could be found on its website.

The company has set up a committee to uphold integrity, chaired by Sir Crispin Tickell, the former diplomat. A leading environmentalist, he also sits on a board of governance created by Land Rover to oversee its offsetting through Climate Care.

Documents filed at Companies House show that Sir Crispin’s son, Oliver, is a shareholder. He is entitled to 0.3 per cent of royalties. Asked if there was a conflict of interest, Sir Crispin told The Times: “Frankly, no.”

As public fears about the environment grew, big corporations signed offsetting deals. Land Rover employed Climate Care for the world’s biggest offsetting project, to neutralise two million tonnes of carbon from its assembly plants and the first three years of driving each vehicle. According to a Climate Care insider, Mr Mason invested £1 million of his own money to convince Land Rover that his company could meet its needs.

Chris Goodall, author of How to Live a Low-Carbon Life, analysed Climate Care’s project to provide fuel-efficient cooking stoves in Honduras and suggested that it would have happened anyway, since it was backed by other funders. Climate Care replied that its money had been critical to the work going ahead.

Mr Mason said: “There are cowboys out there. The fact that there are cowboy builders doesn’t mean we should not build houses. I’ve spent ten years doing this. This has just cost me a million quid. The green campaigners are all very well but they haven’t delivered yet.”

Blue-chip customers

Land Rover The drivers of 10,000 new Freelanders are being assured that their CO2 emissions are neutralised by a hydroelectric project at a lake in Tajikistan

Cooperative Group The bank promotes its Climate Care donations tirelessly as part of its ethical marketing strategy

British Airways The airline boasted of being the first to introduce an offsetting scheme, but a Commons inquiry accused the carrier of achieving only a “derisory” take-up

Climate Care projects: pedal power, burning dung and hydroelectricity generators

Treadle pumps A century after treadmills were abolished in British prisons, peasant farmers are being encouraged to irrigate land using “human power” rather than diesel pumps. Supporters say that the project alleviates poverty, improves agriculture and enables men to stay with families instead of going to cities for work. It is being introduced in the Indian regions of Chhattisgarh and West Bengal

Burning dung Instead of using firewood for stoves, villagers are encouraged to collect cowpats and water and put them into “biogas digesters”, which create renewable fuel. The project is close to an tiger reserve at Ranthambhore National Park in Rajasthan. Supporters say that it spares the trees, which are the tigers’ habitat

Windmills Two wind turbines have been built at Karnataka in India, bringing renewable energy to the grid

Planting trees Climate Care is paying to plant indigenous species to replace a rainforest at the Kibale National Park in Uganda. Mike Mason, the company’s founder, says that “planting trees is mostly a waste of time and energy” and that the business is to cut tree planting from 20 per cent to 5 per cent of its portfolio. In this particular location, however, Climate Care maintains that the risk of the trees burning down is reduced because the forest develops a resistance to fire within 15 years

Homemade tortillas Women in the central Mexican highlands are said to scrape a living by selling tortillas cooked at home on wood-fuelled stoves. The production of more efficient stoves, saving energy and reducing domestic smoke, is being sponsored by Climate Care

Cleaner stoves The company is paying a respected American charity, Trees, Water & People, to help more households in Honduras to get fuel-efficient wood stoves. A study by Chris Goodall, the green campaigner, found that two years into the project, the carbon savings had yet to be verified

Bulbs for Borat? In Kazakhstan, where electricity comes from coal-fired power stations, Climate Care paid for 9,800 energy-efficient lightbulbs to be given to schools and pupils.

Island of light Islanders on Majuro (population: 20,000) in the Marshall Islands, under threat from rising sea levels blamed on global warming, rely on diesel shipments for their power. Climate Care is helping to install 10,000 energy-efficient lamps instead of ordinary bulbs, savinng bulbs

Patriotic cookers Painted in the national colours of Uganda new stoves being provided in Kampala can halve domestic consumption of charcoal fuel. This project has been submitted for the new Gold Standard verification scheme

Water power Khorog in Tajikistan, which relies on diesel fuel, has suffered intermittent energy supplies and 70 per cent of trees have been cut for firewood. Climate Care is supporting the installation of hydroelectricity generators tapping power from a lake

Wind farm Climate Care is helping to install 82 turbines in Hebei province, one of the windiest areas in China

Stove sellers A dozenwomen in the Spiny Forest of Madagascar are employed to train locals to build fuel-efficient stoves, sparing them the trek to find wood

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