Going Neutral 101: What are Carbon Offsets?

Going Neutral 101: What are Carbon Offsets?

Science is clear: The world needs to drastically cut carbon emissions by 2030 and reach carbon neutrality by 2050. Carbon offsets are an important tool for reaching carbon neutrality, serving as a stop-gap for individuals and organizations as they begin their journeys toward carbon neutrality.

What are Carbon Offsets?

Carbon offsets represent work done to remove or avoid carbon emissions. You could, for example, go outside and plant enough trees to balance your own carbon footprint. Carbon offsets do the same thing, but rather than you planting the trees, you’re paying someone else to do it for you. When you buy an offset, you aren’t physically doing carbon-reducing activities yourself, but you are still investing in the health of people and the planet by supporting projects that reduce, avoid, and remove excess greenhouse gases.

Many activities—renewable energy, reforestation, community development projects, or avoiding industrial and waste emissions—reduce, avoid, or destroy carbon dioxide and other greenhouse gasses. These projects quantify the amount of emissions they avoid or sequester, then sell these specific quantities as offsets. So, if you buy an offset for one ton of CO2, you’re purchasing the credit of an offset project that removed or avoided exactly one ton of CO2 (or CO2e, the global warming potential of a greenhouse gas equivalent to carbon dioxide) from the atmosphere.

Carbon offsets are available to anyone, from multinational corporations to college students. While not everyone can install solar and fully electrify their homes and vehicles, everyone can chip away at their carbon footprint with quality carbon offsets.

But carbon offsets do more than combat climate change. They protect nature, empower disenfranchised communities, and finance projects that are good for people and the planet.

Types of Carbon Offsets

Nature-Based Offsets

Nature-based offsets are created either from carbon captured by various conservation efforts like planting trees, protecting old ones from being cut down, preserving mangroves, regenerative agriculture, and more. Nature-based offsets not only sequester carbon, but offer myriad other benefits, too, such as water filtration, erosion control, air purification, sound buffering, habitat preservation and restoration, and more. According to Project Drawdown, the land and ocean have the potential to reduce/sequester 244-389 gigatons of CO2 by 2050.

Renewable Energy Offsets

Renewable energy offsets help support clean energy projects, displacing fossil fuels and reducing emissions. As such, they are a powerful generator of offsets. Renewable energy offsets assist in scaling renewable deployment, decrease dependence on fossil fuels, and help spur economic growth. Project Drawdown estimates that implementing various renewable energy systems will reduce/sequester 158-389 gigatons of CO2 by 2050.

Community Development Offsets

Helping people live more sustainable, healthy, and efficient lives isn’t just the right thing to do: It decreases emissions significantly in developing nations, and can be a source for carbon offsets. For example, replacing traditional wood and coal stoves with cleaner burning ones drastically reduces emissions from burning wood, and helps prevent deforestation, all of which can be quantified and sold as carbon offset credits. Investing in community health and education initiatives can avoid and remove over 86 gigatons of CO2 by 2050.

Waste to Energy Offsets

Methane is an extremely potent greenhouse gas with over 25 times more warming power than carbon dioxide. Methane commonly leaks from landfills, oil wells, and agricultural waste, where it enters the atmosphere and wreaks climate havoc. Methane can be captured at the source and converted into energy, avoiding damaging emissions and putting a waste product to good use. The avoided emissions associated with methane capture are then quantified and sold as offsets.


What Makes a Good Carbon Offset?

There are so many different types of offsets, and to muddy the waters further, not all are created equally. So what do you look for when choosing an offset?

A good carbon offset must be real, quantifiable, and verifiable. It must actually do what it says it’s doing—removing or avoiding a specified amount of emissions—and must have the evidence to prove it.

What a quality carbon offset is:

  1. Additional: A quality offset must represent at least one metric ton of permanent and otherwise unclaimed CO2 emissions reductions or removals. That is to say, it must be proved that the reductions or removals wouldn’t have occurred had the offset project not been implemented.
  2. Permanent: For an offset to be permanent, its effects can’t be reversed. Whatever carbon the offset reduces, avoids, or destroys must not be released back into the atmosphere.
  3. Verifiable: Offsets must be verified and validated by third party accreditors, and have the documentation to prove it.
  4. Enforceable: Enforcement systems clearly define who owns an offset credit by assigning a unique serial number to each offset. Once a credit is used, it is retired to ensure multiple stakeholders don’t take credit for the same offset (called “double counting”).

As a bonus, the highest quality carbon offsets provide collateral benefits beyond just removing or avoiding carbon, such as improved biodiversity or community health.

What a quality carbon offset isn’t:

  1. Quality offsets don't overestimate the emissions they avoid or remove.
  2. Quality carbon offsets aren’t claimed by anyone else but the buyer.
  3. A quality offset must not cause significant harm to people or the environment.
  4. A quality carbon offset doesn’t replace reducing your carbon footprint, nor is it a blank check to emit more emissions.

The best offsets are fully transparent, support clean technologies, and enrich people’s lives. Consider the following example:

You can buy two offsets: One from a factory that installed carbon scrubbers and avoids emissions, selling them as offsets. Another from an energy company that displaces fossil fuels with community solar projects, creating jobs and supporting a clean energy transition.

Though both offset options avoid the same amount of emissions, investing in the solar project provides more benefits. It invests not only in clean energy, but the local community. The factory basically propagates the status quo, albeit with a little less carbon.


Cool, so you know what makes a good carbon offset, but now what? At Neutral, we do the legwork to bring you offsets that are third party verified with the documentation to prove it, so you can be sure the dollars you invest are doing the most good.

Stay tuned for more content exploring carbon offsets and how they empower a transition to a cleaner, healthier world.

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