How Carbon Offsets Work

Why do People Buy Carbon Offsets?

© Some people buy offsets to make up for air-travel emissions.
© Some people buy offsets to make up for air-travel emissions.
Agency: Dreamstime

As people and businesses become more aware of their own contributions to global warming, some turn to carbon offsets as a way to go neutral. Offset companies first estimate a customer's personal carbon output. Their Web sites include carbon calculators that determine the total GHG produced by a year's worth of electricity or driving, an event or even a round-trip flight. Offset companies then charge an amount based on their own GHG price per ton. The money funds programs that offset an equal amount of emissions. Some offset companies allow customers to choose their projects; others do not.

Aside from the physical benefits of offset projects, voluntary commercial offsets make customers look beyond the limits of their own households or businesses. Before buying offsets, people presumably first reduce their own emissions. They may limit travel, choose energy-efficient appliances or convert to renewable energy. After they cannot reduce any more, or if they find it uneconomical to do so, carbon offsets help make up for the rest.

Some purchasers, however, make no attempt to reduce their emissions before buying carbon offsets. Critics claim that offsets give people who are unwilling to change their lifestyle an easy, monetary way out of taking real responsibility. Offsets do not provide carbon atonement for a trip by private jet or the construction of a sprawling mansion. When the average American car produces more CO2 in a year than the total annual production of an average global citizen, it's clear that monetary investments cannot replace actual GHG reductions in developed nations [source: New York Times].

Carbon offsets have also become the mode in corporate responsibility. Companies with green reputations attract a public increasingly concerned with the environment and global warming. Because carbon offsets are voluntary, generous purchases can help strengthen a company's environmental image. Some companies make real efforts to modify their operations, create fewer GHG emissions and offset the rest. But businesses can also conceal lax environmental standards with highly promoted carbon offsets. Environmentalists call this type of deception greenwashing.

There are hundreds of offset projects available; how do you decide what to buy? In the next section, we'll learn about the emerging standards for offset companies and projects.