A carbon offset is a certificate representing the reduction of one metric ton (2,205 lbs) of carbon dioxide emissions, the principal cause of climate change. Although complex in practice, carbon offsets are fairly simple in theory.
If you develop a project that reduces carbon dioxide emissions, every ton of emissions reduced results in the creation of one carbon offset. Project developers can then sell these offsets to finance their projects. There are hundreds of different types of carbon reduction projects. For example, a dairy farm can install an anaerobic digester to captures and destroys methane that would otherwise be released when animal manure decomposes. However, such anaerobic digester projects are typically expensive to install and maintain. In order to finance the construction and operation of a digester project, a dairy farm can sell the emission reductions in the form of carbon offsets.
Carbon offsets are therefore an available tool for individuals and organizations that wish to mitigate the impact of their own carbon footprint.