Explainer: The Difference Between Carbon Offsets and Carbon Credits

Carbon offsets and carbon credits are both ways to reduce greenhouse gas emissions, but they differ in their approach and usage.

Carbon Offsets

Carbon offsets are a way to compensate for the emissions you produce by funding projects that reduce greenhouse gas emissions elsewhere. For example, if you take a flight and emit carbon dioxide, you can purchase carbon offsets to invest in a project such as a wind farm or a forest conservation program that reduces emissions by an equal amount. Carbon offsets are typically used by individuals and businesses to mitigate their carbon footprint and become carbon neutral.

Carbon Credits

Carbon credits, on the other hand, are a tradable permit that allows a company or organization to emit a certain amount of greenhouse gases. Companies that emit less than their allocated amount of emissions can sell their unused credits to companies that exceed their allocation, allowing the latter to comply with regulations. Carbon credits are typically used by companies to meet their emissions reduction targets and comply with regulations.

In summary, carbon offsets are a way to fund emissions reduction projects, while carbon credits are a permit to emit a certain amount of greenhouse gases. Carbon offsets are typically used by individuals and businesses to mitigate their carbon footprint, while carbon credits are typically used by companies to comply with emissions reduction regulations.