Carbon offsetting explained
A carbon offset is a reduction in emissions of carbon dioxide or greenhouse gases made in order to compensate for or to offset an emission made elsewhere.
When the number of carbon offsets obtained is equal to an individual or organization’s carbon footprint, that person or organization is carbon neutral.
Revenue generated from the purchase of carbon offsets is often (but not always) invested in environmentally-friendly projects, like investments in green computing technologies. The purchase of carbon offsets is a fast-growing industry in the wake of compliance legislation and the development of cap and trade systems.
In the voluntary market, individuals, companies, or governments purchase carbon offsets to mitigate their own greenhouse gas emissions from transportation, electricity use, and other sources.
For example, an individual might purchase carbon offsets to compensate for the greenhouse gas emissions caused by personal air travel. Many companies offer carbon offsets as an up-sell during the sales process so that customers can mitigate the emissions related with their product or service purchase (such as offsetting emissions related to a vacation flight, car rental, hotel stay, consumer good, etc.)
In 2008, about $705 million of carbon offsets were purchased in the voluntary market, representing about 123.4 million metric tons of CO2e reductions.
Offsets are typically achieved through financial support of projects that reduce the emission of greenhouse gases in the short- or long-term.
The most common project type is renewable energy, such as wind farms, biomass energy, or hydroelectric dams.
Others include energy efficiency projects, the destruction of industrial pollutants or agricultural byproducts, destruction of landfill methane, and forestry projects.
Some of the most popular carbon offset projects from a corporate perspective are energy efficiency and wind turbine projects.