Carbon Offsets
Carbon offsets are verified emission reduction or removal credits purchased by an organization to compensate for its own greenhouse gas emissions. One carbon offset represents one tonne of CO₂e reduced or removed from the atmosphere through a project elsewhere, such as reforestation, renewable energy deployment, or methane capture.
Carbon offsets allow organizations to fund emission reduction projects outside their value chain. Projects range from nature-based solutions (reforestation, avoided deforestation, soil carbon) to technology-based approaches (direct air capture, enhanced weathering, biochar) to avoidance projects (landfill methane capture, clean cookstoves, renewable energy in developing markets).
Offset quality varies enormously. Key quality criteria include additionality (would the reduction have happened without the offset funding?), permanence (will the carbon stay sequestered?), measurement rigor (are reductions accurately quantified?), and no leakage (do emissions shift elsewhere?). Major registries — Verra (VCS), Gold Standard, American Carbon Registry, and Climate Action Reserve — apply varying standards.
The SBTi's Corporate Net-Zero Standard does not allow conventional offsets to count toward near-term or long-term reduction targets. Companies can invest in "beyond value chain mitigation" (BVCM) while pursuing reductions, but only permanent carbon dioxide removal (CDR) counts for neutralizing residual emissions at the net-zero target year.
This evolving landscape means that while offsets play a role in climate strategy, they cannot substitute for measured, verified emission reductions. Carbon accounting platforms help organizations quantify their actual reductions separately from offset purchases, ensuring transparency and credibility.
Frequently asked questions
What are carbon offsets? +
Carbon offsets are verified credits representing one tonne of CO₂e reduced or removed through a project elsewhere. Organizations purchase them to compensate for emissions they cannot yet eliminate. Quality depends on additionality, permanence, and accurate measurement.
Do carbon offsets count toward net-zero targets? +
Under SBTi's Net-Zero Standard, conventional offsets do not count toward reduction targets. Only permanent carbon dioxide removal (CDR) can neutralize residual emissions after achieving 90–95% reductions. Companies may invest in offsets as beyond-value-chain mitigation alongside their reduction efforts.
Related terms
Net Zero
Net zero means reducing greenhouse gas emissions as close to zero as possible, with any remaining residual emissions balanced by an equivalent amount of carbon removal from the atmosphere. The SBTi Corporate Net-Zero Standard requires at least 90–95% absolute emission reductions before carbon removals can be used.
Carbon Accounting
Carbon accounting is the systematic process of measuring, recording, and reporting the greenhouse gas (GHG) emissions produced by an organization, product, or activity. It follows standardized methodologies — most commonly the GHG Protocol — to quantify emissions across Scope 1 (direct), Scope 2 (purchased energy), and Scope 3 (value chain) categories, producing an auditable inventory that underpins disclosure, reduction planning, and regulatory compliance.
SBTi (Science Based Targets initiative)
The Science Based Targets initiative (SBTi) is a partnership between CDP, WRI, the UN Global Compact, and WWF that defines and validates corporate greenhouse gas reduction targets consistent with the Paris Agreement goal of limiting warming to 1.5°C above pre-industrial levels.
Decarbonization
Decarbonization is the process of reducing greenhouse gas emissions across an organization's operations and value chain through energy efficiency improvements, fuel switching, renewable energy procurement, process changes, supply chain engagement, and technology adoption. It is the operational work that turns reduction targets into real emission cuts.