What is a carbon offset anyway?

April 22, 2021

A carbon offset is a metric ton of carbon dioxide reduction or absorption that occurs as a result of project activity. This project must be “additional” to or above and beyond any mandatory regulations or industry standards.

Voluntary offsets can be used by individuals or businesses to take action to reduce their greenhouse gas emissions. The purchase of voluntary offsets improves a company’s sustainability rating and affects its CSR score. Additionally, offsets help companies prioritize and achieve social and environmental goals. Offsets can be purchased for either voluntary or compliance reasons, meaning a company can purchase them as a means of reducing their own carbon footprint and to help achieve corporate environmental commitments, or they can purchase offsets to help them meet state and federal regulatory requirements.

Carbon offset projects go through a rigorous process of valuation and third-party verification to ensure that the offsets are of the highest standards and quality. These standards are widely recognized throughout the North American carbon markets and established by the organizations that provide guidance and oversight for the creation and validation of offsets. Carbon offsets can be produced through a variety of project types:

Another benefit to carbon offsets, besides the avoidance of emissions, is the co-benefit of Sustainable Development Goals (SDGs). These are a set of agreed-upon goals established in 2015 that have a global agenda. They are intended not only for developing or struggling nations, but for every country in the world. They recognize that eliminating poverty, protecting the environment, and providing sustainable and equal opportunity employment is good for all nations. Many carbon offset projects support a variety of different SDGs that can help companies not only meet their greenhouse gas reduction targets, but can also help them support their environmental, sustainability, and governance (ESG) criteria.

Carbon offsets can be purchased in two ways in the carbon markets. The first is a direct transfer from one owner to another entity. The second method is through retirement. Offsets are either transferred and retired through an environmental registry. The difference between a transfer and a retirement is that once credits have been retired, they are removed from circulation in the market and are no longer active in the registry system—meaning they cannot be sold again.

A registry platform is a mechanism for managing a carbon offset. From issuance through transfer and retirement, it allows for the movement and tracking of various types of environmental credits (or assets). It is the platform through which an environmental credit becomes a saleable emission unit. It benefits both sellers and buyers in managing assets and allows them to access reports on the movement of credits into or out of their account. It also provides a level of transparency that assures the offsets are created, verified, and managed to the highest industry standards.

Bluesource has been creating unique, high-quality offset projects for over 20 years in both the North American and international markets. We develop high-quality environmental products from over 20 different technologies in over 100 locations, across the United States and Canada. We partner with companies and NGOs from all over to help them take their next step toward environmental action by providing access to the world’s environmental attribute platforms and helping them navigate the process.

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