Background
The Clean Development Mechanism (CDM), created by the Kyoto Protocol, was designed to link the carbon market and sustainable development objectives in developing countries. Through the CDM, countries with greenhouse gas (GHG) reduction targets under the Kyoto Protocol buy carbon offsets in order to comply with caps on the total amount of carbon dioxide they are allowed to emit. Parallel with the CDM market, there has emerged a voluntary market for carbon offsets. The voluntary market consists of companies, governments, organisations, organisers of international events, and individuals, taking responsibility for their carbon emissions by voluntarily purchasing carbon offsets. These voluntary offsets are often bought from retailers or organisations that invest in offset projects and sell parts of the resulting emissions reductions to customers in relatively small quantities.
What are carbon offsets?
A carbon offset negates or 'neutralises' a ton of CO2e (carbon dioxide equivalent) emitted in one place by avoiding the release of a ton of CO2e elsewhere or absorbing / sequestering a ton of CO2e that would have otherwise remained in the atmosphere. A project does not necessarily have to offset CO2 (carbon dioxide), but can also offset a variety of other greenhouse gasses (GHGs), such as methane and hydrofluorocarbons.
