Carbon compensation

Carbon compensation or carbon replacement, sometimes also carbon offset, is the reduction or elimination of emissions of carbon dioxide or other greenhouse gases carried out in order to compensate for emissions carried out elsewhere. A carbon credit or offset credit is a transferable financial instrument (eg a derivative of an underlying commodity) certified by governments or independent certification bodies as representing a reduction in emissions and which can then be bought or sold. Both offsets and credits are measured in tons of carbon dioxide equivalent (CO2 eq.). One carbon offset or credit represents the reduction or elimination of one ton of carbon dioxide or its equivalent in other greenhouse gases.