December 13, 2022

What is a Carbon Offset or a Carbon Offset Credit?

Though they can mean slightly different things, the terms carbon offset and carbon offset credit often are used interchangeably.

Broadly speaking, a particular carbon offset refer to either a reduction in greenhouse gas (GHG) emissions – or an increase in carbon storage (for example, through land restoration or planting trees) somewhere that counterbalances emissions that take place elsewhere.

A carbon offset credit is a government or independent certification body-issued document that signifies an emission reduction of one metric tonne of CO2, or an equivalent to other GHGs. The owner of the credit can use it towards their own GHG reduction goals by retiring it.

The key concept is that offset credits help transfer a net climate benefit from one entity to another. Because GHGs mix globally in the atmosphere, it does not matter where exactly they are reduced.

From a climate change perspective, the effects would be same if an organization:
(a) ceased an emission-causing activity; or
(b) enabled an equivalent emission-reducing activity somewhere else in the world.

Carbon offsets make it easier and more cost effective for organizations to pursue actions with lesser emissions.

Different greenhouse gas emissions 😷

Though CO2 creates the most damage in climate change, there are other greenhouse gases (GHGs) that have a higher heat-trapping effect. Some of these include methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons(PFCs), nitrogen trifluoride(NF3,) and sulfur hexafluoride(SF6). Solving climate change requires reducing emissions for all GHGs.

In order to measure the heat-trapping capabilities of all greenhouse gases (GHGs), global warming potentials (GWPs) have been established by scientists and policymakers.

Because different GHGs linger in the atmosphere for varying lengths of time, GWPs are defined for different time horizons. For simplicity's sake, certified carbon offset credits under well-known standards always use 100-year GWPs.

Thus, it is possible to compare the effects of various GHGs and express carbon offset credit units in terms of CO2 equivalent reductions.

Carbon offset claims are only defensible if several conditions are met. Although organizations sometimes use other types of GHG reduction investments – such as buying “renewable energy credits” – these other methods usually don't fulfil the necessary requirements for effective carbon offset claims.

Carbon offsetting fights climate change indirectly by lessening greenhouse gas emissions in one area to balance out emissions from another area. Whilst it's certainly not a perfect solution to the problem, it is a small step in the right direction. We'd hope that businesses and organisations instead look at reducing their emissions, getting to the source of the problem instead.

What are your thoughts on Carbon Offset Credits?

Many critics argue that carbon offsetting does not actually reduce the amount of greenhouse gases in the atmosphere, and instead it allows companies to continue emitting greenhouse gases as long as they purchase offsetting credits to balance out their emissions.

What do you think about carbon offsetting - do you think it's enough to solve the issues affecting the climate? Let us know your thoughts in the comments below 👇

Fred Stones
Passionate about sustainability and protecting our natural environment, Fred is responsible for leading's efforts to help businesses properly track and then reduce their carbon emissions.

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