Legal Definitions - carbon offsets

Carbon offsets are a way for companies to balance out the amount of carbon they release into the atmosphere by investing in projects that reduce carbon emissions elsewhere. These projects can include:

• Planting trees
• Investing in renewable energy sources
• Carbon capture and storage

For example, a company that emits a certain amount of carbon may purchase carbon offsets to fund a project that plants trees. The trees absorb carbon dioxide from the atmosphere, effectively offsetting the company's emissions.

Carbon offsets are often used in cap-and-trade programs, where companies are given a certain amount of carbon credits that they can trade with other companies. By purchasing carbon offsets, companies can offset their emissions and avoid having to purchase additional credits.