Because greenhouse gas emissions, such as carbon dioxide (CO2), mix in the atmosphere and spread across the entire globe, it is largely unimportant precisely where emissions are created or reduced. In terms of climate change, a pound of CO2 produced in Tokyo will have the same impact as a pound of CO2 produced in New York. Similarly, eliminating a pound of CO2 in London will generate the same benefits as eliminating a pound of CO2 in Los Angeles.

Carbon offsets make good environmental sense because they are a very efficient and cost-effective means of reducing greenhouse gas emissions. Although offsets cannot “solve” the problem of climate change by themselves, they are an important part of the long-term solution to global warming.

Carbon offsets are an efficient means of reducing emissions because they take advantage of differences in the relative costs of emission reductions. In other words, some producers can reduce emissions much more cheaply than other producers; offsets allow these producers to buy and sell emissions reductions. In effect, offsets enable the “cheaper” reducer to eliminate emissions on behalf of the “more expensive” reducer.

Perhaps most importantly, carbon offsets allow us to take action on climate change now. Global warming is a pressing and complex challenge. Just as climate change is largely the product of a range of human actions taken over many years, dealing with climate change will require a host of solutions. For example, the development of renewable energy sources, non-polluting fuels and improvements in energy efficiency are all necessary steps to take. However, some of these steps can only be implemented over the medium- and long-term, whereas we need to act immediately to reduce the damage from global warming. Emissions offsets can help each of us to reduce our carbon footprint right now.

Those wishing to reduce their climate impact can purchase offsets from a variety of retailers, but it is important to keep in mind that not all offsets are created equal. Because the market for carbon offsets is a voluntary market, there are very few government regulations on who can sell them or how they are generated and calculated. While there are a number of voluntary standards that offset retailers employ, there is currently no industry-wide standard to ensure the quality of offsets. It is therefore critical that buyers of offsets choose a reliable retailer adhering to a rigorous standard.