Carbon Offsets

A carbon offset is an emission reduction credit from another organization's project that results in less carbon dioxide or other greenhouse gases (GHGs) in the atmosphere than would otherwise occur. Carbon offsets are typically measured in tons of carbon dioxide (CO2) equivalents and are bought and sold through a number of international brokers, online retailers, and trading platforms. Once it has been used, either for compliance or voluntary motives, an offset must be cancelled to avoid its reuse.

Before it is cancelled, a carbon offset can be considered a market commodity that represents a reduction in GHG emissions. Although most buyers of offsets use them for compliance purposes in a cap-and-trade GHG emission trading scheme, some entities purchase carbon offsets to become carbon neutral. This is ...