Responsible Purchasing Network

Carbon Offsets: Overview

This guide is designed to help better understand the break down of an institutions’ carbon footprint, how to incorporate carbon offsets into a climate action plan, and how to recognize and pragmatically source carbon offsets that achieve reductions in global greenhouse gas emissions. Presently, carbon offsets are the only way to get your carbon footprint to zero. By purchasing carbon offsets, you can demonstrate leadership within your industry, support innovation and deliver eco-conscious programs to your constituency.


Global warming is the consistent and persistent warming trend that scientists have observed over the last century with rising concentrations of carbon dioxide (CO2) levels in the atmosphere. Since 1900, concentrations of CO2 in the atmosphere have increased from 290 to 386 parts per million (ppm) – an unprecedented rise (UNEP 2008). These increased levels of carbon dioxide in the atmosphere are primarily human induced; resulting from the direct and indirect emissions produced from society’s day to day activities. Direct carbon emissions occur from sources owned or controlled by the operational entity, usually from the transportation of owned fleets or the onsite combustion of fossil fuels from furnaces, boilers, etc.  Indirect emissions originate from sources not owned or controlled by the end user. Indirect carbon emissions from an operating facility result from the purchase of electricity, goods and services. Together, direct and indirect emissions make up what is referred to today as the carbon footprint.


Institutions must use best practices for carbon offset purchasing to effectively incorporate carbon offsets into their overall climate action plan.  In fact, offsetting should be the last resort following steps to reduce carbon emitting activities and shift to cleaner alternatives.  First, conduct a comprehensive greenhouse gas inventory, covering all the categories (scopes) explained in the GHG Protocol for Greenhouse Gas Emissions. Then set goals that will lead operations toward carbon neutrality. After deciding the volume of emissions that will be offset, determine the level of services that will be needed from your provider, be it small or large scale purchasing, a diversified portfolio or outreach and communication consulting. When evaluating a provider inquire about third party standards, their method for offset retirement, and their organizational auditing procedures. Be cautious about the way you communicate your carbon mitigation initiatives; businesses that speak too generally about their carbon neutrality run the risk of being deemed ”greenwashers.” Clearly state what the offsets that have been purchased cover and state additional carbon reduction initiatives apart from offsetting.


Though carbon offsets are not tangible commodities, they are commodities that are subject to free market influences nonetheless. The market for voluntary carbon offsets has grown significantly over the past 6 years; in 2008 the market was responsible for offsetting 123.4 million metric tons of carbon dioxide equivalent (EM 2009). Generally speaking, the price of a carbon offset follows the principles of free market economics – supply and demand. If demand for a certain project type or a project input is high, the price of that project will go up and vice versa. In 2008, the price for a carbon offset ranged from $2.00 per metric ton CO2e (tCO2e) to $33.00 per metric ton CO2e (EM 2009). These variations are dependent on the type of project, the third party standard used and the offset provider (retailer, broker, aggregator, developer). Claims about carbon offset co-benefits, project type, and project location have no direct connection to the quality of a metric ton CO2 reduced (the benefit of a ton of CO2 reduced is the same whether it happens with a renewable energy project in the region or a reforestation project in Lebanon), but additional benefits, such as habitat preservation, sustainable development, etc., can increase the price of an offset because these additional benefits increase the quality of the surrounding environment and are generally more marketable.



Some institutions have already begun to take steps toward carbon reductions by entering into binding agreements with other entities. These agreements make participating members accountable for reaching their goals through onsite emission reductions, the buying and trading of emissions allowances and the purchase of carbon offsets.  For example, The American College & University Presidents Climate Commitment is an agreement among higher education institutions to eliminate their campuses’ greenhouse gas emissions over time. Carbon offsets will play a part in the climate action plan but it will be up to the institutions to decide how much of the reductions will be from carbon offset purchases.


Specifications for carbon offset services set criteria for selecting offset providers, including requirements for experience, offset quantity, value-added services and portfolio composition. Some RFPs solicit bids for the purchase of offset credits regardless of project type, while others seek to solicit a specific carbon mitigation project that will geographic priorities. has drafted a model specification for an institutional purchaser looking to purchase greater that 1,000 Mt CO2e.


Third party standards are the most important element in ensuring that carbon credits represent real and permanent reductions in carbon dioxide emissions. Standards ensure that projects are additional, meaning they go beyond business as usual operations. Some standards provide guidelines for project development and verification, such as the Voluntary Carbon Standard and the Gold Standard, while others act as registries that accept projects that meet specific criteria, such as the American Carbon Registry and the Climate Action Reserve.


The products section includes a list of the most prevalent offset providers, including retailers, aggregators, brokers and developers.


Use the following calculators to measure the emissions from scopes 1, 2 and 3

  • Business Calculators business calculator measures office emissions based on utility bills, number of employees, or office space. Businesses can also use the calculators to measure emissions from employee commute, owned fleets, travel, events, paper purchases and shipping.


  • Greenhouse Gas Protocol Calculation Tools
    The Greenhouse Gas Protocol Calculation Tools work in conjunction with the Corporate Accoun


Creative Commons License This work by the Responsible Purchasing Network is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.


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