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What Are Carbon Offsets and How Many Really Work?



Photographer: Luke Sharrett/Bloomberg
Updated on

You’ll hear a lot about pledges from companies and governments to cut greenhouse gas emissions to “net-zero,” as they aim to eliminate their impact to help stave off climate change. Ideally a big chunk of that will come from switching to new lower-carbon technologies, developing more energy-efficient processes, switching to renewable energy sources, and recycling materials more effectively. But what about the rest? Many companies claim it’s not economically feasible to go all the way. That’s where the concept of carbon offsets comes in. But offsets are highly controversial, and the debate about them was reignited by the COP27 climate summit in Egypt.

The idea is that when a company, government or individual absolutely must emit carbon dioxide, the same amount of the greenhouse gas will be removed from the atmosphere by other means to compensate. Using the word “offset” to describe environmental initiatives traces back decades to early efforts to tackle pollution, such as the 1970 US Clean Air Act, before halting climate change became the ultimate goal. While offsets have historically centered on the planting or protection of trees, which absorb carbon dioxide, the term has since been applied to a variety of environmental efforts globally.