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How Do Carbon Offsets Work?

how do carbon offsets work

Feeling overwhelmed as you try to understand carbon offset credits? We get it.

If you Google something like, “how do carbon offsets work,” you’ll end up drowning in conflicting information. Some people argue that carbon-offsetting projects don’t work. Others think that they’re the solution for carbon emissions. A lot don’t understand the difference between carbon credits and carbon offset credits.

That’s where this article comes in handy. Here, you can learn more than the answer to “how do carbon offsets work?” We’ll cover the basics of carbon offsetting, show some carbon offset examples, and answer common questions about carbon offset projects. You’ll also get an understanding of personal and corporate carbon footprints. 

If you want to learn how to offset your carbon footprint, keep reading.

So How do Carbon Offsets Work?

Before you can understand carbon offsetting, we need to take a step back. The first thing you need to know is the difference between carbon offsetting and carbon credits. 

how do carbon offsets work

Carbon Offsets

Carbon offsets help people and companies reduce and undo their carbon footprint. When governments require companies to lower their greenhouse gas emissions, carbon offsetting can help companies meet those expectations. Otherwise, anyone and any organization can use carbon offsetting to improve their carbon footprint.

Carbon offset programs work to reduce CO2 and other greenhouse gases in the atmosphere. The cool thing is that these programs attack the problem from dozens of angles. Some projects absorb carbon through reforestation, and others reduce emissions at their source. Whichever way they do it, you can buy carbon offset credits to actively reduce your negative impact on the environment.

Your favorite airline could use carbon offsets to play its part. Did you know tourism is the source of 8% of emissions worldwide? Imagine if more airlines bought carbon offset credits!

Carbon Credits

Carbon credits give companies the right to emit a certain amount of carbon or other greenhouse gasses.  Usually, each credit is worth 1 ton of greenhouse gas emissions. (That’s the equivalent of a drive from Salt Lake City to Boston!)

Organizations develop carbon offsetting programs that reduce carbon emissions and absorb greenhouse gasses. This lets them create carbon offset credits which you or your company can buy to offset your greenhouse gas emissions.

To sum it up – how do carbon offsets work? By reducing carbon and other greenhouse gases to make up for emissions. Carbon credits are like permission slips for a corporation to emit greenhouse gasses in certain amounts. Buying carbon credits lets you reduce your carbon footprint by actively countering it.

Why Carbon Offsetting Matters

Okay, so now you know how carbon offsetting works. Let’s take a second to talk about its value and why it’s important. So, why does carbon offsetting matter?

The short answer is that people care.

Sustainability concerns and environmental awareness are growing in people of all ages, and it’s having an impact. Nearly a third of Boomers, Gen Xers, and Millennials are significantly greening their lives. People are developing unique sustainability plans that suit their lifestyles, including composting, recycling, and thrifting.

Some companies might shrug it off, but consumers are walking the walk. Over recent years, consumer purchases have gotten 85% greener, and they’re not done yet. Millennials make up the largest number of consumers, and a third of them are willing to spend extra on sustainable options.

Carbon offsetting is a great way for companies across industries to become more sustainable in a world where our environment is more important than ever.  

How Carbon Offsets Can Address Your Carbon Footprint

At EcoCart, we believe that investing in carbon offsetting is an important element of sustainability strategies, not the whole strategy. Carbon offsetting projects are a great way to help companies mitigate their impact while they invest in systems that lower their carbon footprint in the long term.

Just in 2018, nature-based carbon offsetting programs reduced carbon in the atmosphere by 100 million metric tons of carbon dioxide globally. But what does that mean? Well, that’s about the amount of CO2 you would emit if you drove 248,220,556,056 miles in a car. 

That’s still a really big number. Driving from Florida to Alaska is roughly 10,000 miles, roundtrip. You would have to take that trip over 24 million times (that’s 24 with six zeros behind it!) to emit that much carbon dioxide by driving alone.

By taking carbon dioxide out of the atmosphere, these powerhouse carbon offsetting projects make up for carbon emissions. They help people and companies lower their carbon footprints with programs that start as low as $2 per ton of CO2.

Calculate Your Carbon Footprint 

Before you learn more about carbon offsetting, you might want to calculate your personal carbon footprint. Since the point is to improve your impact, this step is huge. As an individual, your carbon footprint is mainly made up of things like your recycling practices, utilities, and travel habits. Once you calculate your carbon footprint, you’ll have a clear picture of your emissions.

Understanding your carbon footprint is the key to reducing it. From there, you can decide how you want to lower it. For example, the average driver can offset their car’s carbon emissions for less than $9 a month. That’s the cost of a streaming service! Maybe you don’t have to carpool, after all.

Other ways to reduce your personal carbon footprint are:

  • Eating less meat and dairy products
  • Recycling
  • Unplug electronics when not using them
  • Conserve energy, such as switching to LED bulbs
  • Be mindful of your water consumption
  • Shop Local
  • Offset your carbon footprint when making purchases online
  • Reducing travel

Calculating Your Company’s Carbon Footprint

You might be overwhelmed considering your company’s carbon footprint, but it isn’t complicated. At the end of the day, your company’s carbon footprint is built on the same elements as your personal carbon footprint. The only difference is the scale.

Different industries and companies tend to have different problem areas. Understanding your company’s carbon footprint can help you reduce emissions such as operations, supply chain, and manufacturing over time. In the short term, your company can invest in carbon offsets to mitigate its impact.

Buy Carbon Offsets From a Reputable Provider

Nowadays, it’s easy to search for carbon offsets and find yourself drowning in possibilities. That’s why it’s more important than ever to research and find a reputable provider. Companies are happy to develop carbon offset projects with minimal environmental impact. Worse, poorly developed carbon offset projects can take advantage of people in developing countries.

But there are a lot of great carbon offset projects out there. Look for offset companies that meet expectations from The Gold Standard and other carbon offsetting authorities. 

In addition, sustainability partners like EcoCart help make partnering with verified projects easier. 

Carbon Offset Examples: How Carbon Offset Projects Work

Okay, this whole carbon offsetting thing sounds like a cool idea. But how does it actually work?

When you think about these things, you probably imagine forest conservation. But there’s a lot more to it than that. Carbon offset projects do a lot of different things to reduce greenhouse gasses. 

For example, farms produce greenhouse gases like methane and CO2. One of our projects helps Swiss farmers to capture and use these gasses to create green energy. 

In our increasingly international world, it’s important to develop projects like this with clear intentions and awareness. The UN’s Sustainable Development Goals are designed to help guide programs that bring “peace and prosperity” to people everywhere. Keeping these goals in mind, carbon-offsetting groups develop projects that do more than help the environment; they make the world a better place.

In Laos, many families have to boil their water to make it safe to drink. That means burning wood and coal, releasing carbon dioxide into the air daily. To help, we have a project that distributes sustainable water filters. The filters give people access to clean drinking water while helping them burn fewer fossil fuels. 

Talk about the best of both worlds.

Carbon offsetting projects can be as simple as forest preservation, or they can be super innovative. The important thing is that they offset greenhouse gas emissions.

Types of Markets for Carbon Offsets

If you were wondering, “how do carbon offsets work?” your next question should be “where do you buy them?” 

Don’t worry, this part is super simple. There are two kinds of carbon offset markets: mandatory and voluntary.

Mandatory carbon markets are called a few things, including compliance markets. These markets are regulated by government carbon reduction schemes. Carbon reduction schemes can happen at any level, from state-wide to international. Companies that are trying to meet compliance requirements have to buy their offsets through the mandatory carbon market. 

Because these markets are made to lower emissions over time, they have clear rules around buying carbon offset credits. To keep companies from using carbon offsets as a crutch, some areas, like California, only allow up to 8% of their carbon emissions to be offset. This forces companies to reduce their emissions or buy carbon credits.

Voluntary carbon markets work independently from compliance carbon markets. They aren’t government-regulated and can’t be used to meet compliance expectations. But, for the most part, they’re expected to meet exacting standards, including having a positive social impact. 

Can Carbon Markets Scale?


With the new emphasis on the role of corporate social responsibility, carbon-offsetting projects are taking off. In 2020, 250 million tons of carbon offset credits were issued. That’s nearly double the number from 2019, and four times the number issued in 2017.

Here comes the best part.

Nature-based carbon offset projects tend to become more productive over time while needing fewer resources. If you invest in a carbon offset project that focuses on rebuilding forests in California, those trees continue absorbing carbon for their entire lifespans. If the offset project you invest in is thoughtfully developed, it’ll even support the local ecosystem and economy.

Other Common Questions About Carbon Offsets

Alright, now you know the basics. These are some common questions people have about carbon offsets, so keep reading to learn more.

How Are Carbon Offsets Created

Carbon offsets are made by independent organizations. A lot of these are companies, but there are also nonprofit organizations that develop carbon-offsetting projects. 

The organizations build their projects based on their values and goals. Imagine in your town that there’s a local nonprofit with a focus on the quality of life for locals and supporting biodiversity. They could create carbon offset projects that plant trees, build more parks, and conserve natural areas. 

Once they calculate the impact of their offsetting projects, they can sell carbon offsets to organizations and people. (You’ll learn more about that in the next section!)

Companies like ours focus on meeting a variety of standards to maximize our positive impact. We offer portfolios of related projects around the world. Our Global Sustainable Infrastructure portfolio supports green energy projects on three continents. We also have stand-alone projects, like protecting the 6,500 acres of Tri-City Forest in Massachusetts. 

At the end of the day, carbon offsets are created by reducing carbon emissions and bringing us a greener future. 

How Are Carbon Offsets Measured

Carbon offsets and their impact are measured in a few ways. The first way is in how many tons of carbon dioxide a project reduces with its impact. For example, the Tri-City Forest captures more than 100,000 tons of carbon dioxide a year. 

But there’s so much more to consider. You should also keep in mind the impact it has on the environment and the local community. 

It’s okay if you’re confused, it’ll all make sense in a second.

Any company can make carbon offset projects and sell carbon offset credits. Sounds great, right? But companies can create projects that damage the land and exploit local communities.

Ethically and thoughtfully created carbon offset projects support the area, from the ground up.  

How Long Do Carbon Offsets Last

Once you purchase a carbon offset credit, it’s “used.” You won’t be able to trade it, because it’s now a part of your carbon footprint. 

But the impact of the carbon offsets you invest in can be long-lasting. Building green energy systems, like solar or wind farms, can mean providing cities with electricity for over 20 years. Protecting grasslands where 80% of North American waterfowl breed will help support natural biodiversity. 

The social impacts of these projects can last, too. Some carbon offset projects involve providing access to clean water and healthier stoves with lower emissions. Other projects create new jobs in a community or make it easier for researchers to study local wildlife. 

What Are Carbon Offsets and How Do They Work

Once you learn about your carbon emissions, it’s easy to see how it all adds up over time. Everything from charging your phone to placing an order from an ecommerce store can add to your carbon footprint.

For companies, environmental impact can stack up to hundreds of thousands of tons of carbon emissions every year. So why don’t we just stop emitting carbon and other greenhouse gases?

Because it’s not always that easy. Sure, we want to stop emitting carbon, but that’s an expensive and time-consuming process. Carbon offsetting projects help individuals and companies to limit their negative impact on the environment.

They typically work by capturing carbon dioxide in the atmosphere or reducing future emissions.

What Is a Carbon Offset Purchase

Everything you buy online is responsible for a series of emissions. Servers powered by fossil fuels. Planes, ships, and trucks to get it from here to there. And everything stacks up.

Carbon offset purchases are purchases that are carbon neutral.

At EcoCart, we believe in making carbon neutrality easy for everyone. That’s why we’re proud to offer things like our carbon offset Shopify app for ecommerce businesses. 

With our products, customers will be able to pay a small fee to make their purchase carbon neutral. With our sustainable cart, brands can transparently share their carbon offsetting story at checkout.

And customers love it! Companies who work with us have seen a 10% increase in conversions, with ⅓ of all customers choosing to go carbon-neutral checkout.

Why Aren’t More Companies Carbon Neutral

A lot of people see carbon offsetting as cheating or a crutch. Instead, we should think of it more like training wheels.

So, let’s say a company is trying to be carbon neutral. (The Science Based Target initiative recommends all organizations go fully carbon neutral by 2025.) They could do it by reducing their emissions to 0 tons of carbon dioxide per year. That’s not easy to do. It’s expensive, time-consuming, and it takes a lot of planning. 

That’s where carbon offset projects come in. Companies (and individuals!) can invest in carbon offset projects to cancel out the emissions they cause. Then, they can work towards reducing their emissions thoughtfully and effectively.

Final Thoughts

Everyone seems to have an opinion on carbon offsets. If you ask, “do carbon offsets work? “ some people will say that they don’t. Others might treat them like a magic eraser for emissions. 

Carbon offset projects work to reduce your carbon footprint. The best projects come from reliable companies. Every project has a unique impact, and you can find one that works for your sustainability plan.

Curious to learn more about how EcoCart empowers businesses to reduce their carbon footprint? Check out some of our most recent projects or get a demo today.

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