The government is promoting offsetting as a way to reduce energy consumption, carbon dioxide emissions and the use of resources such as water by using reclaimed and recycled materials.
Today's National Audit Office (NAO) report says that in 2005-06 only 37 per cent of new government buildings and 18 per cent of major refurbishment projects carried out environmental assessments.
Of those that did, just nine per cent achieved the required standard.
The NAO's own evaluation of non-assessed departments found that four-fifths would have failed the government's targets.
But the report does cite good examples of carbon offsetting in refurbishments in the offices of the Department for Environment, Food and Rural Affairs (Defra) and the Treasury.
Sir John Bourn, head of the NAO, said that a fragmented approach, a lack of knowledge and a perceived conflict between sustainability and value were preventing the government from hitting its targets.
"When I last reported on construction in 2005, I emphasised the need to consider both the costs and benefits over the whole life of a building, not just the initial capital required," he said.
"Despite this, today's report highlights a continuing failure by departments to consider the long-term value of sustainability in their new builds and refurbishments. This is particularly disappointing given the importance of sustainability in promoting a deeper understanding of value for money.
"Government departments and agencies spend in the region of £3 billion each year on new builds and major refurbishments. If sustainability is well handled, and addressed at the very beginning of construction projects, it can and should provide better value for money in the long term."
In an article for website Politics.co.uk, environment minister Ian Pearson denied the government was placing too much emphasis on offsetting.
"No one is suggesting that offsetting is the only thing we need to tackle climate change," he insisted.
"However when it is done effectively, it can reduce the impact of our actions and has an important role to play in the global fight against climate change."
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