Carbon offsets, explained
Carbon offsets are complex in practice, but simple in theory. Here's what you need to know about them.
What is a Carbon Offset?
Although complex in practice, carbon offsets are quite simple in theory.
A carbon offset is simply a certificate that represents some amount of greenhouse gas reduction. Reduction can happen in many ways.
To explain this concept simply, let’s talk about two project types:
- Tree planting
- Clean energy generation
Offset project example #1: tree planting
Tree planting is probably the simplest and most tangible type of carbon offset project.
As we all learned in grade 4 science class, trees naturally pull carbon dioxide from the air, and release oxygen back into it. If you were to go out today and plant a tree, that tree would be responsible for some amount of carbon emissions reduction in the atmosphere that would not have otherwise happened had you not planted it. That last part is key. The reduction would not have happened had you not taken that action.
Because you love this Earth, you’d happily spend your days out in the forest planting trees, right? But like all of us, you’ve got bills to pay. To finance your life, what you could do is sell the emissions reduction that your tree planting service would generate in the form of carbon offsets.
Offset project example #2: clean electricity generation
Let’s say you wanted to help reduce our society's reliance on fossil fuels. You’re awesome! A great place to start would be to build a source of clean energy, meaning it has zero emissions bi-products, such as a wind energy farm.
But building a wind energy farm is expensive. You could get a loan from a bank, or from a private lender, but those loans might not be enough to cover the start-up and ongoing costs of your wind farm business. So what do you do?
You guessed it! Carbon offsets are a key tool in financing early stage renewable energy projects.
Because you are producing emission free energy and piping it on to the energy grid, you are displacing what could have been a fossil fuel derived source of power (most often coal). By existing, your wind farm is reducing the overall carbon emissions of that energy grid. Hooray!
You can help finance the start-up costs of your new enterprise by selling the emissions reduction that your wind farm would generate in the form of carbon offsets.
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How do I know if a project is legit?
Great question!
Like anything, there are high quality and low quality offset projects. You will want to be sure that the projects you choose to support are reputable and genuine in their emissions reduction efforts.
A very important identifier for a high quality carbon offset project is a third party verification standard such as Gold Standard or VCS.
These standards are internationally recognized as some of the best certification bodies for carbon offset projects around the world. If you see their logos associated with an offset project, you can be sure that the project is legit and scores high against the 7 core criteria of a high quality offset project.
