A carbon offset is a measurable avoidance, reduction, or sequestration of carbon dioxide (CO 2 ) or other greenhouse gas (GHG) emissions. Offsets generally fall within the following four categories (discussed in greater detail later in the report): biological sequestration, renewable energy, energy efficiency, and reduction of non-CO 2 emissions. It is generally agreed that a credible offset should equate to an emission reduction from a direct emission source, such as a smokestack or exhaust pipe. The quality of the retail offsets in the voluntary market varies considerably, largely because there are no commonly accepted standards. Assessment of Carbon Offset Sellers

Numerous companies and organizations sell carbon offsets to individuals or groups in the international, voluntary carbon market. Offset prices show a correlation with offset quality. In terms of global climate change mitigation, an emission reduction, avoidance, or sequestration is beneficial regardless of where or how it occurs. The core issue for carbon offset projects is: do they actually offset emissions generated elsewhere? If the credibility of the voluntary offsets is uncertain, claims of carbon neutrality may lack merit. Evidence suggests that not all offset projects are of equal quality, because they are developed through a range of standards. Although some standards are considered stringent, others are less so. Due to the lack of common standards, some observers have referred to the current voluntary market as the "wild west." This does not suggest that all carbon offsets are low quality, but that the consumer is forced to adopt a buyer-beware mentality when purchasing carbon offsets. This places the responsibility on consumers to judge the quality of carbon offsets. The viability—both actual and perceived—of the offset market may influence future policy decisions regarding climate change. For instance, some people are concerned that the range in the quality of voluntary market offsets may damage the overall credibility of carbon offsets. If this occurs, it may affect policy decisions concerning whether or not to include offsets as an option in a mandatory reduction program.
Businesses and individuals are buying carbon offsets to reduce their "carbon footprint" or to categorize an activity as "carbon neutral." A carbon offset is a measurable avoidance, reduction, or sequestration of carbon dioxide (CO2) or other greenhouse gas (GHG) emissions. Offsets generally fall within the following four categories: biological sequestration, renewable energy, energy efficiency, and reduction of non-CO2 emissions.
In terms of the carbon concentration in the atmosphere, an emission reduction, avoidance, or sequestration is beneficial regardless of where or how it occurs. A credible offset equates to an emission reduction from a direct emission source, such as a smokestack or exhaust pipe. The core issue for carbon offset projects is: do they actually offset emissions generated elsewhere? If the credibility of the voluntary offsets is uncertain, claims of carbon neutrality may be challenged.
Evidence suggests that not all offset projects are of equal quality, because they are developed through a range of standards. In the voluntary market, there are no commonly accepted standards. Although some standards are considered stringent, others are less so. Numerous companies and organizations (domestic and international) sell carbon offsets to individuals or groups in the international, voluntary carbon market. Recent studies have found a general correlation between offset price and offset quality.
Due to the lack of common standards, some observers have referred to the market as the "wild west." This does not suggest that all carbon offsets are low quality, but that the consumer must necessarily adopt a buyer-beware mentality when purchasing carbon offsets. This places the responsibility on consumers to judge the quality of carbon offsets.
The viability of the voluntary offset market may influence future policy decisions regarding climate change mitigation. For example, credible offsets could play an important role, particularly in terms of cost-effectiveness, in an emissions control regime. There is some concern that the range in the quality of voluntary market offsets may damage the overall credibility of carbon offsets. If this occurs, it may affect policy decisions concerning whether or not to include offsets as an option in a mandatory reduction program.