Carbon Offsets Explained

Carbon offsetting funds projects in communities across the world that reduce greenhouse gas (GHG) emissions beyond what you can achieve through individual action. You can purchase carbon credits to support these projects and offset the climate impact of your own GHG emissions, even though the projects are located elsewhere. Carbon credits make environmental and economic sense. You can fund projects that reduce emissions elsewhere to mitigate your own GHG emissions that are impossible to reduce.

What is a carbon credit?

Carbon credits are the financing mechanism for carbon reduction projects. A project generates a carbon credit for every one metric ton of CO2e (CO2 equivalent of GHG) that is reduced and verified by an independent third party. Projects sell their carbon credits every year in order to finance their construction and ongoing operation. When you buy a carbon credit, you purchase the environmental benefits of that carbon reduction.

There are hundreds of different types of carbon reduction projects. For example, a landfill can install a landfill gas system to capture methane that would otherwise leak into the atmosphere. Such landfill gas systems are not required on many landfills around the world, and they are expensive to install and maintain. The construction and operation of a landfill gas project is financed by selling carbon credits every year based on the amount of carbon emissions reduced. By funding emission reductions like this, individuals and organizations can mitigate the climate impact of their own carbon emissions that cannot be reduced.

What are the different types of carbon credits?

Carbon reduction projects reduce greenhouse gases in the atmosphere in two ways:

1. By preventing new greenhouse gases from entering the atmosphere.  Examples of these projects include landfill gas capture and industrial gas recycling.  These projects generate carbon avoidance or carbon reduction credits.

2. By removing greenhouse gases from the atmosphere.  Examples of these projects include reforestation or direct air capture (DAC). These projects generate carbon removal credits.

It is also important to know that many projects create multiple sustainable benefits.  For instance, reforestation projects can also restore valuable ecosystems, protect threatened species, and provide jobs and education for surrounding communities.