What is a “carbon offset”?

A carbon offset, also called a “carbon credit”, is a financial asset that can be bought and sold freely. One carbon offset equals one metric ton (approx. 2,200 lbs) of carbon dioxide. To picture what a metric ton of carbon dioxide would look like, picture a block of dry ice (which is frozen carbon dioxide) that is approximately the size of a full-size refrigerator.  In gas form, one ton of carbon dioxide would fill a balloon 30 feet in diameter. Burning 120 gallons of gasoline releases one metric ton of carbon dioxide into the atmosphere.  A carbon offset is generated by reducing or displacing carbon dioxide or other greenhouse gas emissions into the atmosphere.  This reduction can come from either preventing the gases from being emitted in the first place – for example by replacing coal-fired energy with wind energy  - or from sustainable practices that promote the growth of plant life and root system that naturally consume carbon dioxide and stores it in its roots, a process called carbon sequestration.

What is “carbon sequestration”?

Carbon sequestration is the process of removing carbon dioxide from the air naturally, where as “carbon capture” is the process of doing it artificially. Trees, plants, and grass naturally absorb carbon dioxide through photosynthesis. To give an example, an acre of well-managed, non-grazed grassland can sequester about 1 metric ton of carbon dioxide per year.

Where are carbon offsets bought and sold?

The main buyers of carbon offsets are large polluters of carbon dioxide, methane, and other greenhouse gases (such as power plants and factories). In the U.S., these buyers purchase carbon offsets through both mandatory (in 11 U.S. states) and voluntary programs at state and federal levels. Carbon reduction programs have also been implemented in Europe and around the world. SunOne Solutions is a member of the California Climate Action Reserve (CCAR) and the Chicago Climate Exchange (CCX), which are two of the U.S.’s leading voluntary carbon offset registries. SunOne also actively develops projects for the Voluntary Carbon Standard (VCS) and the American Carbon Registry (ACR). In addition to the voluntary markets, the federal government and some additional state governments are discussing setting up new mandatory systems to govern carbon offsets. A bill (The American Clean Energy and Security Act) that supports carbon credits has already been passed by the U.S. House of Representatives in 2009 and the U.S. Senate has been discussing similar clean energy and environmental legislation.