A “carbon offset” is an emission reduction credit which can be purchased by individuals, businesses and governments to reduce their net greenhouse gas (GHG) emissions.

Offsets are purchased from another organization’s project that results in less carbon dioxide or other greenhouse gases in the atmosphere than would otherwise occur. Offsets are so named because they counteract or “offset” a purchaser’s GHG emissions. Effectively offsetting the emissions of an activity makes that activity “carbon neutral”.

Carbon offsets are typically measured in tons of CO2-equivalents (CO2e) and prices vary widely depending on the specific activity purchased. A wide variety of offset actions are available; the most frequent is reforestation, followed by various renewable energy and energy conservation projects.

Examples of offset opportunities include:

  • Restoring biodiversity-rich forests that have been degraded or fragmented
  • Preventing the destruction of threatened biodiversity-rich forests
  • Engaging in other land-use improvement options (e.g., agro-forestry, reforestation, soil conservation)
  • Reducing energy-related emissions in non-company facilities, through, for example:
  • Energy efficiency
  • Green power purchases

Man driving

One example of carbon offset use is DriveNeutral, a nonprofit launched in October by students at the Presidio School of Management in San Francisco. Local drviers are able to calculate their”climate change footprint,” using simple online calculators. Drivers can ‘neutralize their footprint’ by paying $25 to compensate for about five tons of carbon emissions a year – plus a DriveNeutral decal proclaiming their vehicle’s carbon-free status.

Not all carbon offsets are the same, however, and it’s difficult for consumers to know if the pollution reductions they paid for actually took place. Clean Air Cool Planet has published a Consumer’s Guide to Carbon Offsets for Carbon Neutrality that lists some some questions that potential buyers can ask of offset vendors:

  • Do your offsets result from specific projects?
  • Do you use an objective standard to ensure the additionality and quality of the offsets you sell?
  • How do you demonstrate that the projects in your portfolio would not have happened without the greenhouse gas offset market?
  • Have your offsets been validated against a third-party standard by a credible source?
  • Do you sell offsets that will actually accrue in the future? If so, how long into the future, and can you explain why you need to ‘forward sell’ the offsets?
  • Can you demonstrate that your offsets are not sold to multiple buyers?
  • What are you doing to educate your buyers about climate change and the need for climate change policy?


Because of the above concerns, an international standard for carbon offsets was developed to differentiate high quality offsets. Known as The Gold Standard, it ensures that key environmental criteria have been met by offset projects that carry its label. Significantly, only offsets from energy efficiency and renewable energy projects qualify for the Gold Standard, as these projects encourage a shift away from fossil fuel use and carry inherently low environmental risks. Tree planting projects are explicitly excluded by The Gold Standard.

Gold Standard projects must meet very high additionality criteria to ensure that they contribute to the adoption of additional sustainable energy projects, rather than simply funding existing projects. The Gold Standard also includes social indicators to ensure the offset project contributes to sustainable development goals in the country where the project is based.

Although carbon offsets can be worthwhile in promoting awareness of and reducing levels of greenhouse gas emissions, they are best utilized in concert with a personal commitment to energy-efficiency in all areas of one’s lifestyle.

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