Carbon offsets

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Carbon offsets are a mechanisms by which carbon emissions by individuals and/or companies, or even countries, can "offset" there carbon emissions.

Carbon offsets are measured in metric tons of carbon dioxide-equivalent (CO2e) and may represent six primary categories of greenhouse gases. One carbon offset represents the reduction of one metric ton of carbon dioxide or its equivalent in other greenhouse gases.

The concept revolves around buying an "offset" in the form of a certificate or credit, which is associated with activity that is linked to tangible carbon emission reductions.

Examples of offset mechanisms include:

  • Energy efficiency projects to reduce the consumption of power and fossil fuels.
  • Renewable energy projects such as windpower or solar power to produce zero emissions energy
  • The establishment of tree plantations.


Types of carbon offets

Carbon offets are part of large compliance markets such as the proposed Australian CPRS, in which companies, governments, or other entities buy carbon offsets in order to comply with caps on the total amount of carbon dioxide they are allowed to emit.

Smaller voluntary markets are also in existence. These provide individuals, companies, or governments with the opportunity to purchase carbon offsets to mitigate their own greenhouse gas emissions from transportation, electricity use, and other sources. For example, an individual might purchase carbon offsets to compensate for the greenhouse gas emissions caused by personal air travel.

Australian Government National Carbon Offset Program

The Australian government is currently in a consultation period on the regulation of Carbon Offsets.[1] The standard will provide guidance on what constitutes a genuine, additional voluntary offset credit, set requirements for the verification and retirement of such credits, and provide principles for calculating the emissions of an organisation, product or service which could be offset.

Criticisms of carbon offsets

Emission reductions from some offsets may not be guaranteed. For example, tree plantations could be burnt in a bushfire, resulting in their carbon stores being released to the atmosphere.

International carbon offset mechanisms do not take into account all factors associated with emission reductions and can produce perverse outcomes. For example, and the Kyoto Protocol, emission reductions are associated with avoiding land clearing, but can do not count the emissions associated with the destruction of native forests. This is leading to the perverse practice of destroying carbon-rich native forests and replacing them with monoculture tree plantations to provide carbon offsets.

Voluntary carbon offset schemes are often not subject to stringent regulations.


  1. Australian Government National Carbon Offset Australian Government, 9 February 2009

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