A reduction in Greenhouse gas (GHG) emissions – or an increase in carbon storage (e.g. through land restoration or the planting of trees) – used to compensate for emissions that occur elsewhere.
The terms carbon offset and carbon offset credit (or simply “offset credit”) are used interchangeably, though they can mean slightly different things. A carbon offset broadly refers to a reduction in GHG emissions – or an increase in carbon storage (e.g., through land restoration or the planting of trees) – that is used to compensate for emissions that occur elsewhere. A carbon offset credit is a transferrable instrument certified by governments or independent certification bodies to represent an emission reduction of one metric tonne of CO2, or an equivalent amount of other GHGs. The purchaser of an offset credit can “retire” it to claim the underlying reduction towards their own GHG reduction goals.
The key concept is that offset credits are used to convey 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 are the same if an organization: (a) ceases an emission-causing activity; or (b) enables an equivalent emission-reducing activity somewhere else in the world. Carbon offsets are intended to make it easier and more cost-effective for organizations to pursue the second option.
See also: Carbon capture and storage (CCS)