When you buy a green tag, regardless of whether it's from a travel company or a power company, what you're doing, in essence, is making a contribution to clean energy.
Let's say you spend $10 per month on carbon offsets from your local power company. The typical (and simplified) process goes something like this: You're not buying actual wind or solar power, which is a difficult thing to do through the commercial power grid since energy from all different sources -- coal, nuclear, wind, water and solar -- are mixed together before the power is delivered to your house. Instead, you're making a $10 donation that offsets the cost of that clean wind or solar power, as clean power typically costs slightly more to produce than dirty power. The idea is that contributing to clean power can reduce the overall emissions of the dirty power required to run your home, and the power company can afford to increase the amount of clean power it buys from places like wind farms.
In the context of travel, it works in much the same way. You buy carbon offsets in an amount that corresponds to the level of emissions generated by your trip. According to the Carbon Footprint Calculator at TerraPass.com, we're talking about approximately 6,300 pounds (2,900 kilograms) of carbon dioxide per person for that roundtrip flight from New York to Tanzania [source: TerraPass]. So you buy green tags for the amount of clean power that replaces the amount of dirty power that would emit 6,300 pounds of CO2. The goal is to make your trip "carbon neutral" -- averaging out to no extra CO2 emitted into the atmosphere by your travels.
This may seem like a tall order -- figuring out exactly how many green tags you need to balance out your trip. In fact, there are companies these days that make it as easy as clicking a button. And offsetting your emissions costs less than you may think.