Carbon offsetting means reducing or removing GHGs in one place to compensate for an entity’s emissions from somewhere else. A single carbon offset credit represents a metric ton of CO₂ or equivalent GHG that has been reduced, avoided, or removed from the atmosphere. The credits can be certified by governments or an independent certification body and can be traded through a carbon market.

The global carbon offset market is valued at approximately $1 billion and is growing as companies attempt to reduce their carbon footprints. However, not all offset credits are equal. Some “nature-based” credits are derived from projects that estimate emission reductions from avoided land use or development, such as conserving an area slated for timber harvest. For example, the owner of a parcel of rainforest slated for clearcutting is paid not to harvest the trees. Calculation of the avoided emissions will depend on the assumptions and the model used. Forest-based credits are currently one of the most common available.