What are Carbon Offsets

A carbon offset is a credit that a person or organization can buy to decrease its carbon footprint. When the number of carbon offset credits obtained is equal to an individual or organization's carbon footprint, that person or organization is carbon-neutral. Revenue generated from the purchase of carbon offsets is invested in environmentally friendly projects, like investments in green computing technologies.

More generally, carbon offsetting is any reduction of greenhouse gas (GHG) emissions to make up for emissions that occur elsewhere. Carbon offset credits show that an organization or person has reduced its emissions. The term carbon offset is used to describe both the credit and the act of carbon offsetting.

A carbon offset credit represents an emission reduction of 1 metric ton of carbon dioxide. The goal of carbon offsetting is to reduce all or a portion of a carbon footprint.

What are carbon footprints?
A carbon footprint is the total amount of carbon dioxide and other GHGs the activities of a person or organization generates. It includes both direct and indirect emissions.

A direct emission originates from a source the reporting entity owns. An example is carbon dioxide produced from fossil fuel combustion inside a delivery vehicle a company owns. Indirect emissions result from the reporting entity's activities but originate from sources the reporting entity does not own. These are also referred to as upstream or downstream activities.

Producing a T-shirt creates indirect emissions at various points in the supply chain. These include growing the cotton and shipping raw materials and the final product, as well as later decomposition of the material in a landfill. These indirect emissions contribute to both the producer's and the consumer's carbon footprints.

The Environmental Protection Agency (EPA) and other websites provide free carbon footprint calculators. Individuals can use these calculators to calculate their carbon footprint.

BENEFITS OF CARBON OFFSETS

• Not responsible for operating costs or capital costs
• Annual yield with credits received each year during term
• Potential value appreciation with purchase terms of credits set upfront
• Security on assets or carbon credit rights
• Established buffer pools protect against accidental damage or lost