With all the stress on the environment today, carbon and greenhouse gas (GHG) reduction has become a major issue. With more than 20 million tons of carbon dioxide being produced globally each year; reducing carbon emissions, curtailing waste, and producing more clean energy are the call of the day. Eco-conscious individuals, businesses, and corporations are all striving towards reducing their carbon footprint. When emissions are reduced as much as possible or until it’s feasible to eliminate the carbon footprint, carbon offsets come into play. A carbon offset is a form of trading, specifically a credit for the reduction in harmful emissions not by the firm’s actions but through the work of another establishment. This credit is generated when the said establishment’s work results in a drop in the level of carbon dioxide or greenhouse gas emissions below a certain mandatory or voluntary cap. The mandatory/compliance cap is usually set by governments or an international body. Therefore, a carbon offset essentially lets an entity pay to reduce the level of these harmful pollutants rather than making any improbable or unachievable reductions on its own.

These carbon offsets are traded on a local, national and global scale. An international network of retailers, brokers and trading arenas exist to facilitate the buying and selling of these offsets. The offsets are normally measured in terms of a ton of carbon dioxide equivalents i.e. CO2e. Various activities can help create carbon offsets; for example, the use of renewable sources of energy such as wind power and biomass energy as well as participating in activities like reforestation and agriculture. The use of renewable energy systems can generate a tremendous carbon offset, due to the important fact that they eliminate the dependency on fossil fuels and virtually generate zero emissions.

As far as offset projects go, wind projects tend to be more sustainable and viable, especially since the process does not produce any ozone harming by-products and does not depend on fossil fuels. To quantify how many carbon offsets are generated by a wind farm, according to the American Wind Energy Association (AWEA), in 2008, the U.S. wind energy industry brought online approximately 8,500 megawatts (MW) of new wind power capacity. This production will help avoid nearly 44 million tons of carbon emissions – the equivalent of taking 7 million cars off the road. Therefore, for every megawatt of installed capacity, a wind farm can potentially earn approximately 5,175 of CO2e – the equivalent of taxing approximately 820 cars off the road. Wind energy generation organizations sell carbon offsets, benefitting both the buyer and the company. Buyers purchase these offsets because supporting wind power not only leads to the creation of a ‘green’ source of energy, but also helps ‘negate’ their own greenhouse emissions, big and small. Buying carbon offsets from wind farms are not only a way to ease the buyers’ conscience and reduce their carbon footprint, but can also be much less expensive than making changes to eliminate emissions. The wind energy generation facility itself profits because selling these offsets makes the project more financially viable and profitable, which helps increase the scale of productivity as well.

With environmental markets growing, it is necessary to understand the scope of emissions today.

There are three different scopes for carbon emissions that occur in the carbon footprint of an organization or business concern: