carbon offset n. A donation or other act that aims to remove a certain amount of carbon dioxide from the atmosphere to compensate for the same amount of carbon dioxide that someone or something has added to the atmosphere.
What Are Carbon Offsets?
What are carbon offsets? Well, suppose that your activities contributed to the release of too much carbon dioxide into the atmosphere, perhaps by excessive reliance on personal travel by air or automobile. However, you aren't able to reduce this travel, but you still want to plant trees to compensate for your emissions. This would create a carbon offset.
Similarly, if you had a company and wanted to compensate for your emissions, you might create an offset by implementing energy conservation practices or by developing renewable energy sources. Another method of compensating for excessive pollution is by purchasing or trading emission credits. Government entities set a limit on the amount of pollution companies are allowed to discharge into the atmosphere, and the companies have a given amount of emission credits. Let's say that your company may be unable to stay under that cap. You would then have the option of purchasing credits from a company that is able to keep their emissions below the cap and therefore has excess credits to sell or trade.
Some critics have questioned the value of carbon offsets, claiming that planting a few trees hardly compensates for releasing pollution into the atmosphere. Further, they argue that companies will have no incentive to change their environmentally harmful practices if they are simply able to buy emission credits.