Topic: Carbon Offsets

Carbon Offsets

Carbon offsets or carbon credits are a neoliberal economic construct meant to utilize the marketplace to incentivize companies to reduce their carbon emissions. A single offset represents one ton of carbon dioxide in the atmosphere, and these credits are government certified, to be bought and sold between government and industry. These credits encourage companies to seek out lower emissions in the production or distribution of goods. As governments pass policies to penalize carbon emissions, companies can purchase carbon offsets to lessen the impact of their growth. The cost to sequester carbon combined with government regulation could incentivize industry to change how it operates. Carbon offsets, like carbon taxes and subsidies, are an attempt to construct carbon pricing, thus putting an environmental and economic price tag on industry’s growth.

The United Nations under the Kyoto Protocol created The Clean Development Mechanism, a system to manage the exchange of carbon offsets. As the carbon marketplace expands, offsets take form as voluntary or compliant. Voluntary offsets are purchased by individuals, non-profits, and companies that want to lessen their carbon footprint, whereas a compliant carbon offset is purchased because regulations require a company to lessen its carbon emission. The multibillion-dollar carbon marketplace is considered one of many important tools for combatting climate change. As climate change is a global issue, carbon offsets function on a global scale. Purchasing an offset could support projects around the world that are restoring habitats or building clean energy infrastructure.

©2024 ClimateLit (Jared Goodman)

Related Terms: carbon credits, carbon neutrality, net zero carbon emissions, carbon sequestration, carbon pricing.


Irfan, U. (2020, February 27.) Can you really negate your carbon emissions? Carbon offsets, explained. Vox. Retrieved from

Pomeroy, R. (2022, September.) Carbon offsets. Transcript World Economic Forum’s Sustainable Development Impact meetings. Retrieved from

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