A beginner’s guide to carbon offsets

sustainability planting tree for carbon sequestration

A beginner’s guide to carbon offsets

A beginner’s guide to carbon offsets 1903 1979 Impact Sustainability

So far in your sustainability journey, you’ve learned a little bit about the different types of greenhouse gas emissions and how your company might approach measuring and reporting your impact.

Once you start getting into some of the nitty gritty detail of where your emissions are coming from, you can then determine where you might be able to make some reductions.

Through this process it’s likely that you’ll come across instances where you aren’t able make reductions. There are many reasons why this could be the case. Maybe there isn’t a suitable zero emissions alternative, or the change requires large capital works that aren’t within your budget in the short term.

That’s okay. Technology is changing rapidly and low emissions technologies are decreasing in costs on a daily basis. Just stay committed and keep an eye on the market for when things change. In the short term though, you can still achieve net zero by offsetting these emissions.


A carbon offset is an activity that results in the reduction of carbon dioxide being emitted in the atmosphere. This could be achieved by either stopping an emission from being made (avoided emissions), or physically removing, capturing or “sequestering” carbon dioxide that’s already been emitted (sequestered emissions).

The types of activities that could be considered a carbon offset (avoided emissions) are things like avoided deforestation, wind and solar power replacing fossil fuels, gas capture at landfills, methane capture from abandoned coal mines, organic waste management, biodigesters, and energy or water efficiency technologies. Offsets generated from sequestration activities includes reforestation and soil carbon capture from regenerative farming.

In practice, carbon offsets function as a kind of tradable “right’ or “certificate” linked to these carbon reduction activities. So a company can buy certificates or fund projects as a way to balance out any negative impacts they can’t avoid or reduce, with the goal to achieve an overall carbon footprint of net zero emissions.


A “carbon credit” allows us to put a simple numerical value on our carbon offsets. They’re a financial product that is regulated and issued by the Australian Government to companies undertaking carbon offset projects.

Essentially they’re the mechanism we use to verify and quantify how much of a reduction is actually being made by the project to give us a consistent national benchmark, and allow offsets to be verified and reported accurately. So, for every tonne of carbon dioxide removed or avoided by a carbon offset project, the company will earn one carbon credit.

The market for carbon offsetting is made up of two types of demand: compliance and voluntary.

Compliance market

Compliance demand is where companies or other entities are legally required to offset carbon in order to comply with caps on the total amount of carbon dioxide they allowed to emit as mandated by government. Failure to comply with these mandatory caps within compliance markets results in fines or other legal penalties.

The compliance carbon market was initiated by the Kyoto Protocol’s Clean Development Mechanism (CDM). The different countries that signed the Kyoto Protocol (which has since been superseded by the Paris Agreement) agreed to mandatory emission reduction targets, enabled in part, by carbon offset purchases by higher-income countries from low- and middle-income countries.

Voluntary market

The voluntary market is where individuals and companies purchase offsets to compensate for their greenhouse gas emissions as part of their own sustainability targets, without being legally obliged to do so.


Now that you have the basics, here are some handy links for more information about carbon offsets, purchasing carbon credits, and more.