Carbon Offset is often described as a mechanism for cancelling out the effect of carbon (really greenhouse gas) emissions. We can quantify the carbon dioxide emissions of Business A reasonably accurately by looking at energy bills, production techniques, materials used and distribution methods. From this analysis we some up with a total in tonnes of CO2 produced by Business A. So far, so good.

To offset Business A we need a business or project that reduces greenhouse gases elsewhere on the planet, and in doing so (in theory) cancels out the harmful effects of Business A. Let’s say Business B is a commercial project from which methane is safely extracted from a landfill site in Mexico, preventing the greenhouse gas from leaking into the atmosphere and harming the environment.

Each “tonne” of gas that is not leaked or that the forest takes out of the atmosphere is measured in the form of a tonne of gas and this represents 1 tonne of carbon offset. Get it? There have been a number of issues with the world of offset. Firstly, because it’s a new(ish) market, the providers of projects like Business B often operate in an unregulated, non-governed space.

So literally anyone can become an offset provider as long as someone is willing to buy their tonnes of carbon offset from them. Offset providers act as buyers and sellers of these projects, more often than not buying from a project provider and then packaging them up and selling them at a higher price than they bought, which is where the arguments start.

The difference between the purchase price of the original tonne of offset and the sale price in the market has been up to 100 times the price, so there is potential for extraordinary profits. So the idea of inventing a Business B offset project and then selling tonnes of carbon credits at a price you control in an unregulated market could lead some to conclude that it is a great business to get into, or a dark art to be avoided at all costs.

Thankfully the sharks that do this practice are fewer now than they once were. The independent standards of regulation have tightened up thanks to initiatives such as Gold Standard and pressure to disclose market information. The Times Newspaper now publishes the price daily in its business section so people can look at that and compares it to where they are buying. It is not an exact comparison but why should a United Nations regulated credit be cheaper than a credit look-alike that is extracted from an unregulated forest plantation somewhere else?

So there we have it – offset is just about buying good things, making sure they are good things, and then selling them onto people who want to do bad things in the hope that they would rather do good things than pay for the privilege of doing bad. Now wouldn’t that make the world a cleaner, safer, simpler place to live?