The term carbon offset means that you attempt to mitigate or reduce the effects of your emission of greenhouse gases by trying to do other activities which may have an equivalent value. For example, you might attempt to mitigate your carbon footprint or amount of carbon dioxide that you are responsible for producing because you own a private vehicle, by planting many, many trees in your community. To mitigate means you are offsetting your carbon emissions rather than reducing the degree to which you create carbon emissions in the first place.
The term carbon offset is used in close relation to the concept of emissions trading. In emissions trading, a government agency is usually responsible for setting mandatory limits for emission of a type of pollutant. If the enterprise is able to stay within limits for emission of that pollutant, the government will grant economic incentives to the enterprise as a reward for reducing pollution released into the environment. Strangely enough, if an enterprise has surpassed the limit for the emission level of the pollutant, the enterprise has the option of purchasing "credits" from other enterprises which have been able to stay well within emission limits. A credit represents how much emissions an enterprise is permitted to release into the environment.
The same principle used in emissions trading has been set into place through the adoption of the global Kyoto Protocol carbon credits scheme. Carbon credits designates a monetary or financial value to greenhouse gas emissions. For instance, one credit means the owner of the credit has permission to release one tonne of carbon dioxide. The Kyoto Protocol is one internationally-recognized treaty which defines the limits of emissions that entire countries can release into the environment over a certain period of time. These countries are then responsible for regulating the businesses or enterprises which operate in their jurisdiction, as far as their level of emissions are concerned. Just like in emissions trading as shown above, the carbon credits scheme allows businesses which have surpassed the permitted amount of emissions released to purchase carbon credits from those businesses which have been able to stay within emissions limits. An interesting aspect of carbon credits is that they can be traded on an open market level as well, with a market price being observed.
On the other hand, there are companies which are able to observe a carbon project mechanism in the way they operate. A carbon project pertains to a business program where the enterprise attempts to reduce its total level of greenhouse gas emissions so that the company will receive funding in return (as a reward, so to speak.) Carbon projects are better than simply buying carbon credits because it means the business is attempting to voluntarily cut down on its greenhouse gas emissions. Some enterprises choose to adopt a carbon project because they may have been guilty of surplus emissions in the past, and saw the carbon project mechanism as being preferable to paying a carbon tax or buying carbon credits from other enterprises. (A carbon tax can be perceived as a default penalty to be paid by the enterprise because it surpassed limits for emissions.)
The term carbon offset is used in close relation to the concept of emissions trading. In emissions trading, a government agency is usually responsible for setting mandatory limits for emission of a type of pollutant. If the enterprise is able to stay within limits for emission of that pollutant, the government will grant economic incentives to the enterprise as a reward for reducing pollution released into the environment. Strangely enough, if an enterprise has surpassed the limit for the emission level of the pollutant, the enterprise has the option of purchasing "credits" from other enterprises which have been able to stay well within emission limits. A credit represents how much emissions an enterprise is permitted to release into the environment.
The same principle used in emissions trading has been set into place through the adoption of the global Kyoto Protocol carbon credits scheme. Carbon credits designates a monetary or financial value to greenhouse gas emissions. For instance, one credit means the owner of the credit has permission to release one tonne of carbon dioxide. The Kyoto Protocol is one internationally-recognized treaty which defines the limits of emissions that entire countries can release into the environment over a certain period of time. These countries are then responsible for regulating the businesses or enterprises which operate in their jurisdiction, as far as their level of emissions are concerned. Just like in emissions trading as shown above, the carbon credits scheme allows businesses which have surpassed the permitted amount of emissions released to purchase carbon credits from those businesses which have been able to stay within emissions limits. An interesting aspect of carbon credits is that they can be traded on an open market level as well, with a market price being observed.
On the other hand, there are companies which are able to observe a carbon project mechanism in the way they operate. A carbon project pertains to a business program where the enterprise attempts to reduce its total level of greenhouse gas emissions so that the company will receive funding in return (as a reward, so to speak.) Carbon projects are better than simply buying carbon credits because it means the business is attempting to voluntarily cut down on its greenhouse gas emissions. Some enterprises choose to adopt a carbon project because they may have been guilty of surplus emissions in the past, and saw the carbon project mechanism as being preferable to paying a carbon tax or buying carbon credits from other enterprises. (A carbon tax can be perceived as a default penalty to be paid by the enterprise because it surpassed limits for emissions.)