Carbon offset
A tradable credit representing one tonne of CO2e reduced, avoided or removed by a project outside the buyer’s own operations, used to compensate for the buyer’s emissions.
A carbon offset (carbon credit) is issued by a standard such as Verra VCS, Gold Standard, the American Carbon Registry or, under the Paris Agreement, the Article 6.4 mechanism. Each credit should represent one tonne of CO2e that is:
- Additional: would not have happened without credit revenue
- Permanent: not reversed, for example by forest fire
- Not over-estimated: realistic baseline, leakage accounted for
- Not double-counted: claimed only once, with corresponding adjustments for internationally transferred credits
Credits fall into avoidance (avoided deforestation, cookstoves, landfill gas, renewables) and removal (afforestation, biochar, enhanced weathering, DAC with storage). Prices differ sharply: nature-based avoidance credits traded around USD 2–15/t in 2023–2025, high-quality forestry removals USD 15–40/t, and engineered removals with geological storage USD 400–1,000/t.
The voluntary market shrank after 2022 investigations found many REDD+ and renewable energy credits non-additional or over-credited. The Integrity Council for the Voluntary Carbon Market's Core Carbon Principles label and the SBTi position, which excludes offsets from counting towards near-term targets, aim to restore integrity.
Related terms
All terms →- Carbon neutral
A claim that the CO2 emissions attributed to an entity, product or event have been reduced and the remainder compensated, usually by purchasing carbon credits.
- Net zero
A state in which anthropogenic greenhouse gas emissions are balanced by anthropogenic removals over a specified period, so net additions to the atmosphere are zero.
- Direct air capture (DAC)
Engineered systems that extract CO2 directly from ambient air using chemical sorbents or solvents, producing a concentrated stream for storage or use.
- Carbon capture and storage (CCS)
Technologies that separate CO2 from flue gas or process streams, compress it, and inject it into deep geological formations for permanent storage.
- Carbon price
A cost applied per tonne of CO2e emitted, through a carbon tax or an emissions trading system, so that the climate damage of emissions enters market prices.