Carbon offsets

Carbon offsets pay for projects that reduce the amount of CO2 in the atmosphere. Are they all equal?
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  • Updated:16 Sep 2008

04.Types of carbon offsets

How carbon offsetting works

Carbon offsetting is where consumers voluntarily pay to reduce or remove greenhouse gas emissions from the atmosphere. This is to counteract or compensate for pollution they’ve caused. In Australia, buying offsets is voluntary (you don’t have to).

Here’s how this voluntary carbon market works:

  • Companies set up or finance projects that reduce greenhouse emissions.
  • When emissions are reduced, carbon offset credits or certificates are created.
  • Consumers can buy these credits or certificates from retailers, usually through a website.
  • The cost of one tonne of carbon offset can be anything from $6 to $50.

Offset examples

So how can emissions be reduced or avoided? Some of the main types of offset projects, which are situated in Australia and overseas (often in developing countries), are:

  • Renewable energy ‘Clean’ energy is generated from sources like water, wind and sun. This means dirty coal-based energy production is avoided, so there are fewer carbon emissions.
  • Trees/forestry projects Trees suck up (‘sequester’) carbon from the atmosphere and store it. For the purposes of carbon offsets, projects are set up to plant new trees (to remove and store atmospheric carbon), or to avoid deforestation (to stop existing stores of carbon from being released into the atmosphere).
  • Energy efficiency projects Perhaps the most effective way to reduce emissions is to use less energy, and use it more efficiently. For the purposes of offsets, a company might set up projects that increase energy efficiency (for example, by installing free energy-efficient light bulbs in homes, while selling credit for the resulting emission reduction to you as a carbon offset).
  • Methane flaring Waste that decomposes in landfills, and agricultural processes, create methane gas. Capturing and burning this gas enables generation of energy, and prevents methane escaping into the atmosphere, where it would produce 21 times more global warming than the same amount of carbon dioxide.
  • Waste diversion Waste can be prevented from going to landfill, instead being used for other purposes and preventing the release of methane. For example, organic waste can be processed and used for compost, without releasing methane.

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