What Is a Carbon Offset?

A carbon offset refers to any reduction of greenhouse gas emissions (GHGs) or any increase in carbon storage (e.g., by planting trees or land restoration) to make up for emissions that happen elsewhere.

An organization or a person is carbon-neutral when the number of acquired carbon offset credits equals an individual or organization's carbon footprint.

Carbon offset credits show that a person or an organization has decreased its emissions.

What Are Carbon Footprints?

The entire amount of carbon dioxide and other GHGs that the activities of an organization or a person generate is called a carbon footprint. It comprises both direct and indirect emissions.

A direct emission comes from a source the reporting entity owns - for instance, the carbon dioxide from fossil fuel combustion inside a company's delivery vehicle.

In contrast, the indirect emissions result from the reporting entity's activities but come from sources the reporting entity does not own.

An example of indirect emission is T-shirt production. It generates indirect emissions that take part in the carbon footprints of the producer and the consumer.

How Does Carbon Offsetting Work?

Individuals and organizations pursue carbon offsetting voluntarily or comply with regulations.

A company or an individual can pay a broker to remove a portion of carbon from the atmosphere, wherein a customer computes their emissions level. The broker then charges a fee according to that level.

Thus, the broker will use a portion of that money to invest in a project that decreases carbon emissions. The project might be planting trees or investing in renewable energy.

For instance, a certain amount of GHG will release into the atmosphere when an individual may take a flight.

The person will use a tool to compute the emissions released on that flight and then buy a carbon credit from a broker to offset that amount of emissions. The broker deducts its fee and uses the rest of the money to invest in an emissions project like a reforestation effort.

Steps to Offset Carbon Emissions

The process of offsetting carbon emissions can be done through the following steps:

Calculate and Measure Emissions

For companies to do this, specific protocols could help them. One good example is the GHG Protocol, an internationally recognized accounting standard that assists organizations in managing and measuring GHG emissions.

The protocol split emissions into three scopes.

  1. The direct emissions from sources an organization controls or owns
  2. The indirect emissions from steam, electricity, heating and cooling resources bought by organizations.
  3. The other indirect emissions that come from an organization's value chain.

Reduce Emissions Where Possible

A sustainability strategy will develop once an organization measures emissions and identifies the sources.

The companies should use 80% renewable electricity by 2025, as the Science-Based Target initiative (SBTi) advised.

Carbon reductions can also be attained through individual action, such as changing to a more sustainable diet or switching to greener transportation like trains with hybrid locomotives and electric vehicles.

Offset Remaining Emissions

Emissions that are unable to be reduced outright can be offset. Reduction projects are ones where carbon dioxide is removed or absorbed.

A project must be certified to issue carbon credits. Some international certification examples include Gold Standard, Plan Vivo, and Climate Action Reserve.

5 Types of Carbon Offset Projects

There are several ways you can offset your carbon emissions. The most common ones are the following:


Renewable Energy Carbon Offset Projects

Renewable energy carbon offset projects include solar, wind, and hydroelectric power that help reduce emissions by displacing fossil fuel-based electricity generation.

These clean energy projects are not just a feel-good cause but also economically viable.

Natural Carbon Solution Offset Projects

Another way to offset emissions is through natural carbon solutions such as forest conservation, reforestation, and avoiding deforestation projects.

This offset project also protects ecosystems, including ocean and coastal habits, and allows the forest to generate.

Industrial Carbon Solution Offset Projects

Industrial solutions include carbon utilization, capture, and sequestration projects, including burying emissions underground.

Another example is Waste CO2 that can be used in concrete production, permanently trapping gasses that would have ended up in the atmosphere. 

Waste Diversion and Management Carbon Offset Projects

Waste diversion and management projects include waste-to-energy, where methane is captured at landfills and then used for electricity generation instead of being released into the atmosphere.

This offset project aims to keep commercial and household organic waste from slowly dying in landfills.

Recycling and Reusing Carbon Offset Projects

Recycling and reusing include recovering discarded plastic from the environment, reusing industrial wastewater, and refurbishing yesterday's computers for their second life.

Another advantage of having these offset projects is that they reduce the need to make entirely new things from scratch with brand-new resources.

Can Carbon Offsetting Solve Climate Change?

The carbon emission still occurs in offsetting, but someone else offsets it.

Offsetting has some value in stopping climate change, but it is only one of many climate solutions necessary to save the climate.

Offsets encourage polluters to fund other entities to stop producing GHGs. Offsets encourage implementation and improved carbon policies of them where there previously were none.

Carbon offsets will not solve climate change except if the leading carbon emissions producers commit carbon neutrality.

Thus, developing a sustainable supply chain and committing to using clean and renewable energy sources is required.

Final Thoughts

While individuals and companies can make a dent in their carbon footprints by offsetting emissions, only systemic change will avert the worst impacts of climate change.

Reducing emissions should always be the first priority, but offsets provide a way to take responsibility for pollution when that's not possible.

When choosing an offset project, it's essential to ensure it is verified and certified and supports renewable energy or other sustainable practices.

Just remember: offsets are not a free pass to keep polluting. If we want to avoid the worst impacts of climate change, we need to reduce emissions across the board drastically.


1. What is a carbon offset?

A carbon offset is a reduction in carbon dioxide emissions or other greenhouse gases made to compensate for or cancel out an emission made elsewhere.

2. What are carbon footprints?

A carbon footprint is the total amount of greenhouse gas emissions from the production, use, and end-of-life of a product or service.

3. How does carbon offsetting work?

Individuals and organizations pursue carbon offsetting voluntarily or comply with regulations. They do this to mitigate their own greenhouse gas emissions.

In other words, they "offset" their emissions by paying for or investing in carbon dioxide reductions made elsewhere.

4. What are the steps to offset carbon emissions?

The steps of carbon offsetting involve calculating and measuring emissions, reducing emissions where possible, and offsetting remaining emissions.

5. What are the different types of carbon offset projects?

There are five main types of carbon offset projects: renewable energy, natural solutions, industrial solutions, waste diversion and management, and recycling and reuse.

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