What is a GHG Offset?

A carbon offset (or more accurately a greenhouse gas offset) allows the purchaser to claim credit for qualifying emissions reductions or carbon sequestration happening anywhere in the world. The purchaser can then count the offset against a regulatory emissions cap, or simply claim that it has voluntarily mitigated climate change. Buy enough offsets and the purchaser might claim to be carbon or climate “neutral” or even “negative.”

To be considered an offset, a ton of reduced emissions or sequestration has to meet several requirements:

  • The climate benefit is permanent
  • The climate benefit can’t “leak” through market or other forces
  • The climate benefit is quantifiable and verifiable
  • The climate benefit is not fraudulent or double-counted
  • The climate benefit is “additional.”

Most of these criteria are easy to understand, even if they’re not necessarily easy to apply in practice. The one exception is “additionality,” which has turned out to be the biggest Achilles Heel of carbon offsets. What is “additionality?”

Why has “additionality” ended up being so critical? Two reasons:

  • There are so many “non-additional” emissions reductions and sequestration that could inappropriately find their way into offset markets. Hundreds if not thousands of public policies in the United States alone encourage energy efficiency, require landfills to not leak methane, encourage the planting of trees, encourage the purchase of electric vehicles, among many other things with GHG implications.

* It is not easy to differentiate between “additional” and “non-additional” emissions reductions and sequestration. “Additionality testing” is the means by which legitimate tons are supposed to be able to be traced back to the workings of the carbon market.

Some critics suggest that a large fraction of the offsets being sold in voluntary and even in compliance-based markets are actually non-addition. It’s beyond the scope of this micro-site to dig deeper into the details of the topic, but you can do so either through our Ebook or eCourse, both listed at right.