When people search for the ability to purchase carbon, they are typically looking for mechanisms designed to mitigate the effects of greenhouse gas emissions. These mechanisms transform the environmental impact of pollution into a measurable, tradable commodity. Purchasing this commodity funds projects that either reduce new emissions or actively remove existing gasses from the atmosphere. Understanding this market is necessary for any individual or organization seeking to participate in climate action efforts.
Defining Carbon Credits and Carbon Offsets
The terms “carbon credit” and “carbon offset” are often used interchangeably, but they represent distinct tools in the climate finance market. A carbon credit is an allowance or permit to emit one metric ton of carbon dioxide equivalent (CO2e). These credits are generally part of a government-mandated cap-and-trade system, requiring regulated entities to hold enough credits to match their verified emissions.
A carbon offset is a verified reduction or removal of one metric ton of CO2e that occurs outside the purchaser’s operational boundary. The purpose of an offset is to compensate for emissions that a company or individual cannot currently avoid. This unit is generated by projects such as reforestation, renewable energy installations, or methane capture from landfills.
The Two Structures of Carbon Markets
The trade of these carbon units occurs within two systems known as carbon markets. The first is the Compliance Carbon Market, established and regulated by mandatory government legislation. These markets, such as the European Union Emissions Trading System (EU ETS), impose a cap on the total emissions allowed from large, high-emitting industries like power plants and heavy manufacturing. Companies covered by these regulations must secure enough carbon credits, or allowances, to cover their emissions or face penalties.
The second system is the Voluntary Carbon Market (VCM), where participation is not legally required. This market allows companies and individuals to purchase carbon offsets to meet internal sustainability goals or corporate social responsibility commitments. The VCM provides a platform to fund a wider array of innovative or smaller-scale projects not included in regulatory compliance programs. While compliance markets drive large-scale change through regulation, the VCM fosters broader participation and flexible, self-imposed climate action.
Purchasing Carbon Offsets as an Individual
The VCM is the primary avenue for individuals seeking to take direct climate action through purchasing offsets. The process begins with calculating one’s carbon footprint, often focusing on unavoidable emissions from air travel, household energy use, or vehicle mileage. This calculation provides a target metric for the number of offset tons needed to achieve a balanced footprint.
Individuals can purchase these offsets through a variety of venues, including retail offset providers, non-profit organizations, and platforms associated with specific project developers. Many airlines, for example, offer the option to purchase offsets directly when booking a flight to compensate for the associated emissions. Organizations like Carbonfund.org and TerraPass offer platforms where individuals can select and purchase offsets, often tailored to specific needs like annual household usage or a single flight. These retailers serve as intermediaries, maintaining accounts with program registries and retiring the purchased offsets on behalf of the buyer. This ensures the unit cannot be reused.
Ensuring Quality and Verification of Projects
Not all carbon offset projects offer the same environmental assurance, making project quality and verification a necessary part of the purchasing decision. A core concept in quality assessment is additionality. This means the emissions reduction or removal would not have occurred without the financial incentive provided by the sale of the offset. If a project would have been implemented anyway due to legal requirements or financial viability, it is not considered additional, and its offsets have little environmental integrity.
Another factor is permanence, which requires that the carbon reduction or removal be long-lasting and difficult to undo. For example, a forestry project must have measures in place to ensure the trees remain standing and continue to store carbon for a defined period. Third-party standards organizations, such as the Verified Carbon Standard (Verra) and Gold Standard, provide scrutiny. These independent bodies apply rigorous methodologies and conduct audits to verify that projects meet these criteria, providing assurance that the purchased offsets represent a genuine climate benefit.