Carbon offset

A financial instrument designed to reduce greenhouse gas emissions in both compliance markets (under governmental cap and trade programs) and voluntary markets. One carbon offset credit equals one metric ton of carbon dioxide equivalent. Typical projects that generate carbon offset credits include: installation of renewable energy projects such as wind, solar, biomass, hydro electricity; recovery of landfill gas (methane) produced from decomposition of waste in modern landfills; energy efficiency projects; and forestry projects that increase the sequestration capacity of a given land over is current land use (e.g. converting degraded agricultural land to a natural forest).