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Carbon offsets are financial instruments that may be purchased and traded to compensate the GHG emissions released by a person or a firm. The rationale behind purchasing offsets is to balance those emissions that cannot be avoided during the course of our normal lives. If one generates emissions in the presence of an alternate sustainable way, it is generally objected to by eco-conscious people. For ease, one carbon offset is determined as the decrease of one metric ton of CO2.

Numerous nations in Europe have made nationwide legislations that permit organizations to emit up to a specific amount of emissions. If a company emits more than the assigned limit, it has to purchase carbon offsets to settle the equation. While this obligatory requirement to sustain a low carbon footprint is the major driver of carbon trading, there is another smaller voluntary market. People who care for the environment purchase offsets to eliminate their personal carbon footprint though they are not required by law to do this.

So that’s how the demand for carbon offsets arises, either due to legal regulations that somehow penalize organizations or via increasing environmental awareness amongst voluntary purchasers. But how are offsets ‘manufactured’? Offset providers take part in large scale projects that are designed to curb GHG emissions in hundreds of thousands of metric tons, and as mentioned earlier, every metric ton of greenhouse gas reduced produces an offset. The aim is to lessen the overall emissions released into the air without worrying about borders.

This is comprehensible because greenhouse gases released in one nation affect the whole planet when they mix into thin air. And that’s why several carbon offsetting projects are executed in India even though most of offset purchasers reside in Europe and North America. This approach has become famous because reducing greenhouse gases in developing nations is mostly inexpensive than curbing the same quantity of emissions in western nations.

This small article won’t enter the debate of carbon offset scams. All in all, carbon offsets do play a role in reduction of greenhouse gases if generated by legitimate projects and sold with complete transparency.

Source: Greenhouse Gas