In this series, Jennifer Gumpert, our VP of Business Development and Operations, walks us through material terms and concepts that are used frequently, but not always understood. This week: carbon offset.
Carbon offsets are practical and effective ways to address climate change and encourage the growth of renewable energy. These offsets are measured in tons of carbon dioxide equivalent (or, “C02e”) with one ton of carbon offset representing the reduction of one ton of carbon dioxide or its equivalent in other greenhouse gases.
In its simplest form, carbon offsetting is the effort we take to either reduce our carbon footprint or counteract the negative effects of our behavior through local or global initiatives designed to improve biodiversity, reforestation, or clean energy.
Beyond the personal impact we can make through carbon offsets, reducing emissions can be achieved must faster through programs funded specifically for carbon offset. Through these organizations, carbon offsets are measured and converted into an instrument, such as a carbon offset credit, which can then be issued to individuals or companies.
In compliance markets, like that of the European Union, companies, governments or other entities buy carbon offsets in order to comply with mandatory and legally binding caps on the total amount of carbon dioxide they are allowed to emit per year. If these organizations fail to comply with these mandatory caps, they can be hit with fines or legal penalties.
In voluntary markets, demand for carbon offset credits is generated by individuals, companies, and organizations who purchase offsets to mitigate their greenhouse gas emission to meet carbon neutral, net-zero or other established emission reduction goals. These offsets are facilitated by certification programs who provide standards, guidance, and requirements for project developers to follow in order to generate carbon offset credits.
